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Sick of hearing about Tea Party Protests -- about Taxes going down?

Here's some "Protest News" that is worth knowing about ...

Oregon sues fund company for college savings losses
AP Executive Morning Briefing - April 14, 2009

SALEM, Ore. (AP) — State officials are seeking $36.2 million in damages from OppenheimerFunds Inc., which managed a fund responsible for steep losses in the Oregon College Savings Plan. Officials said in a statement Monday that risky, "hedge-fund like" investments cost the Oppenheimer Core Bond Fund 36 percent of its value last year — and 10 percent more so far this year.

(emphasis added)

Hopefully this is the beginning of some REAL Accountability, for all those Wall Streets Wizards, who don't think twice, about gambling away YOUR Life Savings... Some Investments, (like Pensions and College Savings) are SUPPOSE to avoid Risk:

Oregon Sues Over Risks Taken In Its '529' Fund
By SHEFALI ANAND and CRAIG KARMIN - WSJ - April 14, 2009

On Monday, Oregon sued the firm for losses of $36 million incurred by participants in the Oregon College Savings Plan, which Oppenheimer manages. The accounts, known as "529" plans, are a way for individuals to save tax-free for college expenses.
Oregon charges that Oppenheimer Core Bond fund, which was in the state's 529-plan options billed as "conservative," became significantly more risky starting in late 2007 or early 2008. The fund lost 36% of its value in 2008, but its benchmark index, the Barclays Capital Aggregate Bond Index, rose 5.2%.

"The Core Bond Fund was no longer a plain bond fund," the complaint says. "It had become a hedge-fund like investment fund that took extreme risks."

The complaint says the fund veered into credit-default swaps and other derivatives, which the state called "high-risk bets that were plainly inappropriate for those saving for college."

(emphasis added)

Way to go Oregon!
If Wall Street Bankers, actually had to PAY for their Stupidity, well just maybe they'd be LESS Stupid, with your Money!  Derivative bets are NO way to invest for the Future.

Well it good to see that Oregon is not alone in its outrage:

At least four other states had hired Oppenheimer to manage parts of their college-savings plans, including Texas, New Mexico, Illinois and Maine.

Perhaps these States are only taking their cue from the US Labor Department, which filed a similar suit against an investment house, late last year:

U.S. Labor Department sues California investment advisor and executives to recover losses and hidden fees charged to employee benefit plans
October 24, 2008

San Francisco -- The U.S. Department of Labor has sued Zenith Capital LLC of Santa Rosa, California, and its executives for allegedly investing the assets of 13 retirement plan clients in the hedge fund Global Money Management LP while receiving undisclosed incentive fees from the hedge fund's sponsor and manager.

The lawsuit alleges that Zenith Capital and executives Rick Lane Tasker, Michael Gregory Smith and Martel Jed Cooper violated their fiduciary obligations under the Employee Retirement Income Security Act (ERISA).
The Labor Department's suit seeks a court order requiring the defendants to restore all losses owed to the plans, requiring them to undo any transactions prohibited by law ...

(emphasis added)

Interesting ... Investment Firms, must follow the Law ... Hmmmm?

What Does Employee Retirement Income Security Act - ERISA Mean?

The Employee Retirement Income Security Act of 1974 (ERISA) protects the retirement assets of Americans by implementing rules that qualified plans must follow to ensure that plan fiduciaries do not misuse plan assets.

Accountability must begin somewhere, how about with holding Big Banks to their "legal" Fiduciary Responsibility?

If they fail to respect, and protect, our Life Savings and Pension Funds, WHY should we continue to respect, and protect them?

"Too big to Fail", may mean "Too big to exist" ??

Originally posted to Digging up those Facts ... for over 8 years. on Tue Apr 14, 2009 at 06:12 PM PDT.

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Comment Preferences

  •  Tips (11+ / 0-)

    Tips for making Wall Street Wizards,

    Accountable for their Actions.

    In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

    by jamess on Tue Apr 14, 2009 at 06:13:10 PM PDT

  •  I wouldn't put too much stock in the language (3+ / 0-)
    Recommended by:
    Nulwee, jamess, FarWestGirl

    of ERISA.  ERISA-governed plans are some of the biggest hedge fund clients.  Weirdly, SEC rules limit participation in hedge funds to wealthy individuals and not-for-profits.  (along w/ some other minor classes of investors)

    Odd, right?  

    We are building a team that is continuously being built. - Sarah Palin

    by burrow owl on Tue Apr 14, 2009 at 06:15:42 PM PDT

    •  So how do suppose (2+ / 0-)
      Recommended by:
      burrow owl, Cliss

      College Saving Plans, by the State,
      ended up in Hedge Fund type investments, (CDS and derivatives)?

      Is their an exemption for State Plans too?

      In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

      by jamess on Tue Apr 14, 2009 at 06:33:49 PM PDT

      [ Parent ]

      •  IIRC, it goes back to "portfolio theory." (3+ / 0-)
        Recommended by:
        Cliss, jamess, FarWestGirl

        Under portfolio, one wants to have a well-balanced portfolio of investments: if one sector goes up, another goes down.  Similarly, the risk factors are balanced: a certain portion should be in low-risk assets like bonds or cash, and a certain portion should be in higher-risk assets like hedge funds.  

        Given that, it's very common for exempt organizations to be pretty heavily invested in high-risk investments like hedge funds and the like.  

        Check out big not-for-profits like Harvard or the Gates Foundation, and they've got substantial hedge fund holdings.

        We are building a team that is continuously being built. - Sarah Palin

        by burrow owl on Tue Apr 14, 2009 at 06:45:10 PM PDT

        [ Parent ]

        •  Partly true (0+ / 0-)

          Hedge funds were marketed as diversifiers because they were SUPPOSED to move differently from other asset classes.  However, as of early 2008 they were showing a positive correlation with said other classes (ie, they weren't really as independent as advertised), which is why  significant outflows from hedges occurred...  I don't know what has happened since early 2008, so perhaps this has changed.

      •  Sorry, I think I misread you. (1+ / 0-)
        Recommended by:

        Yeah, state plans like pension plans and 529s are typically exempt organizations like private foundations or charities for SEC purposes, and so they can invest in hedge funds and the like.

        We are building a team that is continuously being built. - Sarah Palin

        by burrow owl on Tue Apr 14, 2009 at 06:46:29 PM PDT

        [ Parent ]

  •  Thanks to AG John Kroger and Treasurer (6+ / 0-)

    Ben Westlund - two good Dems.

  •  Are Corporate Officers Liable? nt (1+ / 0-)
    Recommended by:

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Tue Apr 14, 2009 at 06:25:19 PM PDT

  •  I checked out the 2008 financials, (5+ / 0-)
    Recommended by:
    tmo, RiaD, Cliss, jamess, FarWestGirl

    and the fund very clearly disclosed its derivative positions.  The relevant accounting standard was effective for the 2007 financial statements, so someone at the OR 529 knew or should've known at least a year ago.

    Given that, one can't help but wonder if this isn't a CYA suit.

    We are building a team that is continuously being built. - Sarah Palin

    by burrow owl on Tue Apr 14, 2009 at 06:32:04 PM PDT

    •  I look at it (3+ / 0-)
      Recommended by:
      burrow owl, vcmvo2, RiaD

      as a smart move, by Citizens

      towards finding Accountability.

      White Collar Crime
      (or White Collar recklessness)

      should neither be coddled, nor condoned!

      They ALL deserve serious Accounting Reviews, imo.

      you know, "learn from the past, or be doomed to repeat it"

      yada yada ...

      In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

      by jamess on Tue Apr 14, 2009 at 06:37:14 PM PDT

      [ Parent ]

  •  Also guilty: state of oregon officials who (3+ / 0-)
    Recommended by:
    RiaD, jamess, FarWestGirl

    should have known better.

    Namely, Randall Edwards the Treasurer.  He needs to be hung out to dry.  
    He was so enthusiastic about this fund, he probably lined his pockets with this toxic crap.  The Oregonian made a very explicit note about other people involved.

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