OppenheimerFunds under scrutiny
OppenheimerFunds Inc., a unit of Massachusetts Mutual Life Insurance Co., is under scrutiny by attorneys general in five states for investment losses in college-savings accounts that used its bond funds.
Officials in Illinois, Maine, New Mexico, Oregon, and Texas began last month to jointly explore whether OppenheimerFunds violated its fiduciary duty to investors in the so-called 529 plans, said Scott Burnham, a spokesman for Illinois Treasurer Alexi Giannoulias. Investors lost $85 million last year in Illinois-sponsored accounts run by the firm, whose managers bought mortgage-linked securities before prices plunged along with residential real estate.
"Parents are stunned because Oppenheimer didn't tell them that they would be exposed to the riskiest part of the bond market," said Derek Loeser, an attorney with Keller Rohrback LLP in Seattle.