The Office of the Illinois State Treasurer may reach a settlement with OppenheimerFunds Inc. by the end of this month to recover $77 million for the state’s Bright Start College Savings Program as a result of losses from the Oppenheimer Core Bond Fund last year.
The Office of the Illinois State Treasurer may reach a settlement with OppenheimerFunds Inc. by the end of this month to recover $77 million for the state’s Bright Start College Savings Program as a result of losses from the Oppenheimer Core Bond Fund last year.
The bond fund was billed as a conservative investment option in the Bright Start Section 529 plan, but it lost 36% of its value in 2008. Illinois 529 investors lost $85 million in the fund last year.
“We’re really hopeful we can resolve this in the coming weeks and repay families as soon as possible,” said a spokeswoman for the treasurer’s office. “All the parties are working together really well.”
A settlement with Illinois is expected to affect Oppenheimer’s negotiations with Maine, Nebraska, New Mexico and Texas, which also have 529 plans that do business with the New York-based company.
Oregon filed a lawsuit against OppenheimerFunds in April. The state is seeking to recover $36.2 million that it claims its 529 investors lost due to the Core Bond Fund’s taking “extreme risks in a search for speculative large returns,” the suit stated.
