PHILADELPHIA, July 2, 2012 /PRNewswire/ -- Five institutional investors, including two union benefit funds from Philadelphia, the Bricklayers and Allied Craftworkers Local 1 of PA/DE Health and Welfare Fund and the Bricklayers Local 54 of Pennsylvania Supplemental Welfare Fund, announced today that they have sought preliminary court approval of a $25 million settlement of a class action alleging violations of securities disclosure laws pertaining to investments in the now defunct mutual fund known as the Evergreen Ultra Short Opportunities Fund ("Ultra Short Fund"). The investors are represented by Stewart L. Cohen of Cohen, Placitella & Roth, P.C. (Philadelphia, Pennsylvania). Cohen was one of three lead attorneys appointed by the presiding court to represent a national class of investors and was lead trial counsel when the settlement was forged.
The lead plaintiffs claimed that the defendants responsible for the Ultra Short Fund marketed it as a safe, liquid, and stable investment and lured investors by representing the mutual fund as higher-yield alternative to a money-market fund. Contrary to its public filings and disclosures, including its registration statements and prospectuses, the Ultra Short Fund actually invested in illiquid, volatile and risky non-agency mortgage backed securities ("MBS"). Even after the market for MBS began to deteriorate, the Ultra Short Fund continued to invest in MBS and concealed the portfolio's deteriorating value from the public by artificially inflating the asset values of the individual securities in its portfolio, causing its net asset value to be overstated. When the defendants' scheme collapsed and the true risks of the Ultra Short Fund materialized in June 2008, the Ultra Short Fund was forced to liquidate. As a result, Fund investors lost almost 25% of their investment.
The class action pending in the U.S. District Court of Massachusetts sought damages on behalf of purchasers of shares in the Ultra Short Fund between October 28, 2005, and June 18, 2008. It named as defendants the entities and individuals responsible for marketing the Ultra Short Opportunities Fund: the Evergreen Fixed Income Trust, the Evergreen Investment Management Company, Wachovia Corporation, and Evergreen Investment Services, Inc., along with former officers Dennis Farro, Kasey Phillips, and the entire Board of Trustees.
In addition to Cohen, the class was represented by Robbins Geller Rudman & Dowd, LLP (Boca Raton, Florida), and Evangelista & Associates, LLC (Atlanta, Georgia). The Defendants were represented by Reed Smith LLP (Pittsburgh, Pennsylvania), and Ropes & Gray LLP (Boston, Massachusetts). The settlement was negotiated as the parties were on the verge of beginning trial. Cohen stated: "This settlement is a significant achievement for investors in the Ultra Short Fund, as well as all investors in mortgage-backed securities. We are particularly pleased to be able to recover on behalf of our institutional investor clients who ultimately were cheated of millions of dollars as a result of the blatant misrepresentations made by the defendants."
The settlement approval process requires a fairness hearing as well as court approval. The court is in the process of setting a hearing date for the fairness hearing and the processes for notifying the class and administering the settlement, in the event the settlement is approved.
SOURCE Cohen, Placitella & Roth, P.C.