Corporate & Securities Law

SNSFE Investigates Fidelity Ultra-Short Bond Fund

By James Eccleston

A class action lawsuit has been filed in the United States District Court for the District of Massachusetts on behalf of purchasers of the Fidelity Ultra-Short Bond Fund who purchased the fund between June 6, 2005 and June 5, 2008.  The complaint alleges that Fidelity Management & Research Company, among others, violated the Securities Act of 1933.

The complaint alleges that on or about August 23, 2002, the defendants began offering shares of the Ultra-Short Bond Fund pursuant to an initial registration statement filed with the SEC.  The complaint alleges that the defendants solicited investors to purchase shares of the Ultra-Short Bond Fund by making statements that described the Fund as a fund that: (1) seeks a high level of current income consistent with the preservation of capital; (2) allocates its assets across different market sectors and maturities; (3) has a similar overall interest rate risk to the Lehman Brothers 6 Month Swap Index; and (4) is geared toward the preservation of capital. 

As alleged in the complaint, these statements were materially false and misleading because the defendants did not adequately disclose the risks associated with investing in the Fund, including, for example, that the Fund was: (1) failing to compete with the Lehman Brothers 6 Month Swap Index; and (2) so heavily invested in high-risk mortgage-backed securities.

As alleged in the complaint, by June 11, 2007, the defendants slowly began lowering the value of the share price for the Fund.  By November 15, 2007, the value of the per-share price was reduced below $9.  Since then the shares were trading as low as $8.25.

In a companion announcement, there was announced that Fidelity Management & Research Company has been accused of securities fraud and that if someone is a current or former employee or are a member of any Fidelity Management & Research Company investment plans or profit sharing retirement plans, they may be included in the possible Fidelity Management & Research Company 401K or Employee Retirement Income Security Act class action. 

SNSFE is continuing to investigate claims brought against Fidelity and its Ultra-Short Bond Fund.  Those with information should contact SNSFE attorneys.

Source:  Online Legal Marketing

Full post as published by FinancialCounsel on June 19, 2008 (boomark / email).