On Tuesday, the Tenth Circuit declined to review a decision granting certification to a class of investors alleging Oppenheimer Funds, Inc. invested money in its California mutual bond fund in junk bonds. In so doing, the court rejected arguments that class certification will force them to settle the investors’ claims. A three-judge panel denied Oppenheimer’s petition for permission to appeal U.S. District Judge John L. Kane’s October order granting class certification to over 50,000 investor accounts that alleged large junk bond holdings in the Oppenheimer CA muni bond fund that was supposed to hold primarily investment grade paper.
The appellate court rejected Oppenheimer’s claim that class certification would force a settlement because of the size of the potential damages sought by the investors. This particular group of investors was the only group, out of seven plaintiff groups in the multidistrict litigation (MDL), that did not accept the $90,000,000 settlement reached in 2013.
The court held "we do not find that the petitioners have established that class certification will cause the petitioners to settle the case independent of the merits of the plaintiff’s claims, that immediate review is necessary to develop class action case law in this circuit, or that the district court’s certification order was manifestly erroneous." Not surprisingly, an attorney for the plaintiff's group called it a "detailed and thoughtful decision."
While Oppenheimer settled with investors in six of the funds, the settlement left out the suit over the California Municipal Fund, and Oppenheimer promised to vigorously defend what it called a meritless suit. However, the Tenth Circuit’s ruling on Tuesday agreed that Judge Kane had conducted the required “rigorous analysis," rejecting Oppenheimer’s claim that the judge had ignored evidence disputing that the investors’ claims were suitable for resolution as a class action. The appellate court also rejected Oppenheimer's argument that reviewing the certification order would develop case law for similar kinds of securities fraud claims.
The experienced securities litigation attorneys at Colling Gilbert Wright & Carter have investigated and litigated hundreds of individual investor claims as well as investment-related class action claims. If you believe you lost money due to negligence or fraud on the part of your FINRA registered broker dealer, please contact us for a free case evaluation.