Plus, Hennessy buys FBR, Miller takes another step toward retirement, and more.
The Securities and Exchange Commission this week charged OppenheimerFunds
with making misleading statements about two of its mutual funds during the 2008
financial crisis. Oppenheimer agreed to pay $35 million to settle the charges.
According to the SEC's order, Oppenheimer made misleading statements in the 2008
prospectus for Oppenheimer Champion Income OPCHX by not disclosing that the
fund could use derivatives to such an extent that they could be the primary
influence on the fund's returns. The SEC also found that Oppenheimer
disseminated misleading statements to shareholders about Champion Income
Leading up to 2008, the management team running the two funds made overly aggressive bets on mortgage-related securities. Specifically, the managers increased the funds' exposure to commercial mortgage-backed securities by entering into derivative contracts known as total return swaps. These swaps allowed the funds to add market exposure on top of the assets on their balance sheets. Those bets unraveled in 2008, and by the end of the year, Champion Income had lost 78.5% and Core Bond had dropped 35.8%.
The horrid performance prompted Oppenheimer to sack the funds' management
team and address shortfalls in its compliance and risk-management teams.
Oppenheimer also announced
in May that Champion Income will merge into Neutral-rated
BlackRock Manager Set to Retire
Robert Doll, one of
Christopher Leavy, who joined BlackRock in 2010 as chief investment officer
of U.S. fundamental equity, has assumed lead management of all Doll's charges.
Since 1999, Doll has been managing
However, Leavy will not be giving up his CIO position as he tackles the considerable challenge of improving the funds' performance. This is a concern. Doll's energies were also divided as he had the added time-consuming role of BlackRock's very public chief equity strategist. The large, core, and growth funds either lag or barely beat their peers over the trailing three-, five-, and 10-year periods.