SAN DIEGO, Feb. 2, 2016 /PRNewswire/ -- Robbins Geller Rudman & Dowd LLP ("Robbins Geller") (http://www.rgrdlaw.com/cases/thirdavenue/) today announced that a class action has been commenced in the United States District Court for the Central District of California on behalf of purchasers of Third Avenue Focused Credit Fund Investor Class shares (MUTF:TFCVX) and Third Avenue Focused Credit Fund Institutional Class shares (MUTF:TFCIX) between March 1, 2013 and December 10, 2015 (the "Class Period").
If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from January 29, 2016. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, Darren Robbins of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at [email protected]. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.rgrdlaw.com/cases/thirdavenue/. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
The complaint charges Third Avenue Trust ("Third Avenue"), certain of its officers and/or trustees, its investment advisor, Third Avenue Management LLC ("Third Avenue Management"), and M.J. Whitman LLC, Third Avenue Management's affiliated broker-dealer, with violations of the Securities Act of 1933. Third Avenue is an open-ended management investment company focused on value investing, and specifically the purchase of undervalued assets based on fundamental analysis. Third Avenue Focused Credit Fund ("Focused Credit Fund" or the "Fund") is a mutual fund within the Third Avenue family of investment funds that seeks to achieve long-term total returns mainly by investing in bonds and other types of credit instruments, including in a substantial proportion of non-investment grade assets commonly known as "high-yield" or "junk" bonds.
Since its launch in August 2009, the Focused Credit Fund has promised investors access to higher yielding distressed debt investments, while purporting to maintain the liquidity and share redemption guarantees of a traditional mutual fund. For example, the Fund's prospectus and registration statement (together with all amendments and supplements thereto, the "Offering Materials") stated that investors in the Fund would be able to "redeem [their] shares on any day during which the NYSE is open," and that the "Fund will usually make payment for redemptions of Fund shares within one business day, but not later than seven calendar days, after receipt of a redemption request." The Offering Materials also stated that throughout the Class Period, the Fund maintained only a small proportion of its investments in illiquid securities and at no point held more than the 15% threshold set by the SEC. The Offering Materials also stated that only a small proportion of the Fund's assets were "not readily marketable."
The complaint alleges that these statements were false and misleading when made. Specifically, defendants failed to disclose that the Fund had taken on excessive amounts of illiquid securities as it grew in size, more than tripling from approximately $1 billion to approximately $3.5 billion in assets from 2012 to 2014. As a result, the Fund became heavily concentrated in assets for which no market readily existed, subjecting the Fund and investor capital to undisclosed risks of outsized investment losses and to the impairment of shareholders' redemption rights in the event of a market downturn or a run of redemption activity.
On December 10, 2015, Third Avenue Management announced in a letter that it had completely frozen investor withdrawals and shifted all Fund assets into a liquidating trust, stating that it may take a "year or more" for investors with money still locked in the Fund to get their money back (assuming they are able to get their money back at all). Shortly thereafter, David M. Barse, the Chief Executive Officer of Third Avenue Management, was fired. On December 16, 2015, Third Avenue Management issued a second letter to shareholders stating that it had struck a belated deal with the SEC requiring it to transfer assets back into the Focused Credit Fund so that investors could receive more transparency on the liquidation, while the Fund continued to freeze redemption requests. The letter also stated that the initial shareholder distribution would include only 9% of the Fund's remaining capital, indicating that the Fund could not quickly sell 91% of its assets at reasonable or above fire-sale prices. According to the complaint, as its previously undisclosed liquidity problems, concentration of high-risk and overvalued assets, and redemption shortcomings came to light, the value of the Fund's shares plummeted. For example, on December 10, 2015, TFCIX shares closed at $6.46 per share and TFCVX shares closed at $6.48 per share, more than 45% below their Class Period highs.
Plaintiff seeks to recover damages on behalf of all purchasers of Focused Credit Fund TFCVX and TFCIX shares during the Class Period (the "Class"). The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller, with 200 lawyers in ten offices, represents U.S. and international institutional investors in contingency-based securities and corporate litigation. The firm has obtained many of the largest securities class action recoveries in history and was ranked first in both the amount and number of shareholder class action recoveries in ISS's SCAS Top 50 report for 2014. Please visit http://www.rgrdlaw.com/cases/thirdavenue/ for more information.
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