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The Oppenheimer Core Bond Funds and The Oppenheimer Champion Income Funds, which were represented as being conservative, “long-term investments” and “part of a retirement plan portfolio”, went beyond their risk controls by investing in high-risk derivatives and credit default swaps. The Core Bond Funds lost more than 40% in value in 2008, and an additional 10% during the first quarter of 2009. The Oppenheimer Champion Funds declined about 80% in 2008. The Oppenheimer Core Bond Funds were sold in several 529 college savings plans, including the Oregon Savings Plan, Maine’s NextGen College Investing Plan, Nebraska’s State Farm College Savings Plan, Illionois’ 529 Bright Star Plan, the Texas Lonestar 529 Plan, and New Mexico’s Scholar’s Edge and College Sense 529 Plans. Moreover, the Funds were investment choice for investors of variable annuities and offered by retirement plans.
Under NASD Rule 2310, brokerage firms are required to provide their customers with suitable recommendations in light of their other security holdings and financial situation and needs. Moreover, financial advisors are required to conduct adequate due diligence before recommending an investment product to their customers. Unfortunately, many financial advisors placed their customers’ money in the Oppenheimer Core Bond Funds and Oppenheimer Champion Funds without ensuring the products were suitable for them, and without advising their customers of the risks associated with the Funds. As a result, many investors have sustained significant economic damages. Most investors have an arbitration agreement with their brokerage firm, where they are required to pursue their individual claims before FINRA’s Office of Dispute Resolution. In some instances, in order to proceed with an arbitration claim, investors are required to opt-out of pending class actions.