HOUSTON, July 25, 2008 (PRIME NEWSWIRE) -- The Securities Law Firm of Shepherd Smith Edwards & Kantas LLP, www.sseklaw.com, is currently investigating claims on behalf of investors who purchased bond funds, specifically ultra short term bond funds. Most investors purchase ultra short term bond funds for the purpose of safety and liquidity. They are often marketed as cash alternatives, so any loss of principal is unacceptable. Some recent examples of funds in which investors suffered loss of principal in their "safe monies" include:
Evergreen Ultra Short Bond Fund (Nasdaq:EUBAX): It is alleged in current litigation that the fund solicited investors to purchase shares by stating that its investment objective was to: "provide current income consistent with preservation of capital and low principal fluctuation." These statements were allegedly materially false and misleading because the fund employed an undisclosed high-risk strategy that led to realized losses of approximately 18 percent which is inconsistent with the funds stated objective.
Fidelity Ultra-Short Bond Fund (Nasdaq:FAUSX): Under current litigation it is alleged the fund solicited investors to purchase shares by making statements that described its objective as seeking a high level of current income consistent with the preservation of capital. These statements were allegedly false and misleading because the fund did not adequately disclose that it was heavily invested in high-risk mortgage-backed securities.
SSgA (STATE STREET) Yield Plus Fund (Nasdaq:SSYPX). Recent class actions have been filed alleging, in general, violations of the Federal Securities laws. SSgA Yield Plus Fund was promoted, for the most part, as a diversified portfolio with "high-quality debt securities" and "high credit quality," and further touted a "sophisticated credit analysis" and "team based decision making by experienced investment professionals." In fact, the Fund was heavily invested in risky mortgage-backed or mortgage-related securities.
Charles Schwab YieldPlus Funds -- Schwab YieldPlus Select (Nasdaq: SWYSX), Schwab YieldPlus (Nasdaq:SWYPX) and Schwab California Tax Free YieldPlus (Nasdaq:SWYCX). In various complaints it is alleged that the brokerage firm Charles Schwab allegedly violated state securities laws and industry regulations by misleading investors about the underlying risks in the funds, including the extent to which the funds were exposed to the volatility, dangers and illiquidity of the sub-prime mortgage market. In the case of the Schwab California Tax Free fund, it is alleged that the manager unnecessarily exposed the fund's assets to debt tied to LIBOR. Mass redemptions magnified losses for all three Schwab funds.
Though technically not an ultra short term bond fund, the following fund has fallen almost 13% at its lowest:
Oppenheimer Rochester National Municipals (Nasdaq:ORNAX). This high-yield municipal bond fund seeks to maximize yield, focusing on bonds with "fat" coupons. The issue is that these bonds may experience short-term volatility, which is what likely happened given the fund's performance. Also, many of these type of bonds tend to be thinly traded, and selling them into an unreceptive marketplace could make things worse for investors. As in other cases, if redemptions pick up, this scenario could get worse.
Shepherd Smith Edwards & Kantas LLP has a team of attorneys, consultants and others with more than 100 years of combined experience in the securities industry and in securities law. Since 1990, we have represented thousands of investors nationwide to recover losses. We have represented clients in Federal and state courts and in arbitration through the Financial Industry Regulatory Authority (FINRA), the New York Stock Exchange Inc. (NYSE), the American Arbitration Association (AAA) and in private arbitration actions. Collectively, we have represented over 1,000 investors over the last 18 years and our clients have recovered more than $100 million through our assistance in negotiation, mediation, arbitration and litigation. If you have any questions or comments, please feel free to contact us.