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Administration November 20, 2009
Oregon Settles with Oppenheimer on 529 Plan Losses
November 20, 2009 (PLANSPONSOR.com) - The state of Oregon has reached a $20-million settlement with MassMutual Financial Group's OppenheimerFunds Inc. of losses in a bond fund in the state's 529 college-savings plan.
Reported by Rebecca Moore
The Oregon 529 College Savings Board approved the
agreement which will divide $20 million among roughly 45,000 account holders,
based on how heavily individual accounts were invested in the Core Bond Fund,
according to the Wall Street Journal.
In April, the Board and the Oregon State Treasurer sued
the firm for losses of $36 million incurred by participants in the
OppenheimerFunds Core Bond Fund. The suit claimed Oppenheimer Funds represented
that certain investments were appropriate for conservative and
ultra-conservative portfolios – “but shuttled college savings instead into
a hedge-fund like investment fund that took extreme risks in a search for
speculative large returns.” (See Oregon Sues 529 Fund Manager )
Oregon’s Attorney General’s office estimates that about
$5 million of the Core Bond Fund’s losses was due to poor market performance,
the news report said. Attorney General John Kroger noted that the 65% recovery
is much higher than the average recovery for securities class-action cases.
Other states that have also lost money in the Core Bond
fund include Illinois, New Mexico, Texas, Maine, and Nebraska. Illinois is
seeking to recover $77 million for investors in its Bright Start College
Savings Program.