Gloria Allred is smiling.

I see this more as Oregon's failure to fulfill their fiduciary duty than an Oppenheimer investment management failing.

If the Oregon Treasurer wanted a fund that couldn't decline in value, he should have asked for a GIC (Guaranteed Insurance Contract), aka Stable Value Fund, or just encouraged conservative investors to hold the assets in cash.

It's silly to suggest that bond funds shouldn't decline in value, especially during market dislocations such as the "credit crunch". It's unrealistic to suggest that mutual funds (even bond funds) should only increase in value, and (if they decline), you are entitled to be made whole by the fund manager.

Westlund is going to look like a rube (at best) or a crybaby political opportunist (at worst): whaaa-whaaaa-whaaaa, we lost money investing in mutual funds, we have to sue somebody.

Full disclosure: I have about $14k invested in equities via the OCSP, but didn't own the bond fund in question (because my son is 4 years old). I'm down a little more than the bond fund: I'm buying more shares at the cheaper price, not suing anybody.

How do we resolve this amicably with this many lawyers? Randall Edwards decided Oppenheimer was the fund and threw the money in.

One would think Mr Edwards would have done some due diligence to investigate the risk levels of this fund. But then again, like most politicians its OPM, so it doesn't realy matter.

One would think Mr Edwards would have done some due diligence to investigate the risk levels of this fund.

Thats just it though...its "risk". Everyone knows that going in. I dont see how they can sue.

The interesting part is, I heard yesterday that the state can try to sue Oppenheimer to get money lost, but the people who invested in the savings plan cannot sue the state for money lost. (Its written in the fine print.)

Jenngorasm, Steve, and Jon are all missing an important point: This isn't about risk and market fallout at all. Oppenheimer didn't continue invest the money in the conservative manner in which the fund prospectus advertised; they moved some of it into hedge investments, without telling investors, before the market tanked. That's clearly illegal if it's a retail fund, and it's probably illegal in this case.

And that's what the lawsuit alleges.

And whether state officials should have been watching it all more closely is an entirely different matter.

"Oppenheimer didn't continue invest the money in the conservative manner in which the fund prospectus advertised"

Says who? Randall Edwards doing a CYA? Myabe you are right, but one owuld think Edwards would have noticed a change in investment direction and taken appropriate action, but then again it is OPM (Other People's Money.)

Anyone want to bet Randall Edwards becomes very hard to find in the months ahead?

Steve,

Says everyone who's looked at the fund since it tanked. The change in direction was sudden and opportunistic. The fund managers saw an opportunity (credit default swaps) that they thought was undervalued and just took it. Without telling anyone. Edwards, like everyone else, didn't have an opportunity to "take appropriate action." The only notice that anyone got was the tanking value of the fund.

This isn't a bond fund that declined in value because of defaults or increases in interest rates or whatever. Those bond funds are down a bit, but nowhere like this. This is a bond fund that lost its shirt on derivatives that it had no business investing in.

"This is a bond fund that lost its shirt on derivatives that it had no business investing in."
"Oppenheimer didn't continue invest the money in the conservative manner in which the fund prospectus advertised"

Oppenheimer operated WITHIN the bounds of the prospectus.

Rettig: what is a "hedge investment" ?

"The fund managers saw an opportunity (credit default swaps) that they thought was undervalued and just took it. Without telling anyone."

At a minimum, I believe the SEC requires quarterly reporting. My issue is not so much Oppenheimer, but Randall Edwards painting himself as totally ignorant and surprised by the outcome.

If this is the type of money manager the state has maybe there is an issue?

"Oppenheimer operated WITHIN the bounds of the prospectus."

I read the prospectus, and I just can't square it with what happened. I see that they can invest in credit default swaps and other derivatives, but I also see that that a minimum of 80% of assets are to be invested in traditional investment-grade bonds and that "the Fund has limits on the amount of particular types of derivatives it can hold" (whatever those limits are). And nothing about leverage.

Is there *anyone* who *wasn't* surprised by the outcome? Seriously, I'd like to know. If anyone outside of Oppenheimer knew what was going on, they should be recognized.

I wish Kroger would get on white collar crime. It disturbs me that a judge released a child molester last week; Kudos to Kroger for being on the case, I guess. But if you are a judge out there, please stop releasing these creeps and distracting Kroger away from the systemic problems that are hurting us all-such as Schrunk manipulating and controling judges, like his father did before him. Help the guy get a clue, don't keep operating on fear of the creepy DA. Too many cases have been thrown and people hurt already.