Plaintiffs' Personal Injury Law Firm

Oppenheimer Champion Income Fund

The Oppenheimer Champion Income Fund (OCHCX) invested heavily in the sub prime mortgage securities and credit-default swaps. The fund has plummeted in value by more than 80%, making it one of the worst performing taxable high-yield bond funds of 2008. More shockingly, OCHCX dropped 55% in November of 2008 alone. Similar bonds were down 30% in 2008. 

In 2006 Oppenheimer Funds shifted its strategy for the Champion Income Fund from investing in stable investments to riskier total-return swaps, which serve as agreements between parties to exchange cash flows in the future based on the value of an underlying security. Additionally, the Fund concentrated its underlying investments in credit-default swaps or “CDS”. The CDSs dropped precipitously in September 2008 and lost over $230 million through September. A CDS is a credit derivative contract between two counterparties. The buyer makes periodic payments to the seller, and in return receives a payoff if an underlying financial instrument defaults. In exchange for being on the hook to pay out for such issues, CDS sellers receive a stream of interest payments. Oppenheimer never disclosed its concentration in the riskiest levels of these assets. Moreover, the representations made by financial advisors, the marketing material and the prospectus portrayed the Oppenheimer Champion Income Fund as no riskier than the average high-income fund. 

This risky strategy by the Champion Income Fund led to the Fund’s incredible decline. After the collapse, Angelo Manioudakis, resigned as senior vice president of Oppenheimer Funds and manager of the Champion Income Fund. 

If you have been a victim of bond losses or other fraud we can bring a claim on your behalf at FINRA. Call 212-267-3700 x 115 to speak with Attorney Adam Gana to discuss your legal rights.