Oppenheimer fund solicitation challenged in investor lawsuit

Sued by pension plan that alleges investment was solicited with untrue, misleading statements

Mar 27, 2012 @ 1:53 pm

An Oppenheimer Holdings Inc. fund was sued by a Massachusetts municipal pension plan that alleges its investment was solicited with “materially untrue and misleading statements.”

The Brockton Retirement Board, which manages the southeastern Massachusetts city's employee pension plan, today sued Oppenheimer Global Resource Private Equity Fund I LP, sponsor Oppenheimer Asset Management Inc., the fund's administrator, its general partner and two executives in federal court in Boston.

The Oppenheimer solicitation allegedly overstated the value of holdings in the Global Resource Private Equity Fund, described in a private placement memorandum as a fund of funds intending to invest in natural resource-related companies.

“As a result of defendants' misleading statements, plaintiff and other members of the class have suffered significant damages,” the pension plan said in a complaint filed on behalf of other investors who bought into the fund based on the same solicitations. Requiring minimum investments of $500,000 for “Class A” units and $5 million for “Class B” units, the fund raised $85 million from April 2008 to April 2010, according to the complaint. Total investment, it said, was $140 million.

The Brockton plan invested $5 million, $3.2 million of which has been drawn upon in capital calls by the fund's general partner, according to the complaint.

The pension plan alleges violations of federal securities laws and seeks certification of group status for the lawsuit, together with an award of unspecified compensatory damages.

Oppenheimer Holdings disclosed in a regulatory filing March 6 that it had received a U.S. Justice Department inquiry into the valuation of a single portfolio holding in one of its private equity funds and that it was cooperating with the government.

Brian Maddox of FT Consulting, a spokesman for Oppenheimer, said the firm hasn't seen the complaint yet and had no comment.

--Bloomberg News--

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