CHICAGO, July 9, 2008 (LAWFUEL) — Stoltmann Law Offices
announces that it has filed a FINRA arbitration claim on behalf of two
clients of Wachovia Securities LLC for investment losses in the
Evergreen Ultra Short Opportunities Fund (EUBAX, EUBBX, EUBCX, and
EUBIX).
It is believed to be the first FINRA arbitration complaint in the
country against Wachovia Securities arising out of the collapse of the
Evergreen Ultra Short Opportunities Fund.
The FINRA arbitration statement of claim alleges fraud, negligence,
misrepresentations and omissions related to the failure of the firm to
fully disclose risks associated with the Evergreen Ultra Short
Opportunities Fund, according to Andrew Stoltmann, of Stoltmann Law
Offices, in Chicago, Illinois.
The claim seeks recovery of investment losses, along with attorney’s
fees, interest and punitive damages. Stoltmann Law Offices expects to
file additional claims against Wachovia Securities and Evergreen
Investment Services, Inc. in upcoming weeks for investors across the
U.S.
According to Chicago securities attorney Andrew Stoltmann, “Wachovia
clients in the Evergreen funds thought they were getting a safe,
secure, short term bond fund, comparable to a money market fund.
Instead, they received a mutual fund concentrated in high risk,
speculative, mortgage backed securities. The concentrated nature of the
Evergreen fund made it more like a sector or hedge fund than the ultra
short term bond fund Wachovia and Evergreen portrayed it to be to
millions of investors.”
The FINRA statement of claim alleges that the Evergreen Ultra Short
Opportunities fund was marketed to the public with the goal of
providing “current income consistent with preservation of capital and
low principal fluctuation.” According to the complaint, the Fund was
marketed to investors as a higher-yielding alternative to money-market
funds, and was solicited as offering a combination of safety and
liquidity, or the ability to quickly access cash. The Fund was
represented as a safe alternative to money market funds that preserve
principal while being designed “to seek the highest total return by
maximizing income and minimizing price fluctuations.”
According to the statement of claim, while the bond market remained
relatively steady over the last two years, the Evergreen Ultra Short
Opportunity Fund’s performance lagged dramatically as illustrated
below.
TRAILING RETURNS (%) VS. BENCHMARKS
Return EUBIX Category Diff Index* Diff
———————————————————————
Year To Date -21.9 -1.84 -20.06 2.17 -24.07
1-Month -18.7 0.16 -18.86 0.34 -19.04
3-Month -20.35 -1.63 -18.72 2.17 -22.52
1-Year -23.13 -1.42 -21.71 7.67 -30.8
3-Year -24.75 2.19 -26.94 5.48 -30.23
———————————————————————
* = Lehman Brothers Aggregate Bond Index
According to the complaint, Bloomberg’s website categorized the
Evergreen Ultra Short Fund as “corporate/preferred-investment grade”
funds, and 106 funds are categorized as such. The table below shows the
bottom seventeen funds in this category:
Rank Symbol Name NAV YTD Return
———————————————————————
89 DEEAX DELAWARE-EX DR-A 5.310 -2.230
—–
90 DGCBX DELAWARE-CORP-B 5.310 -2.286
—–
91 DEEBX DELAWARE-EX DR-B 5.310 -2.355
—–
92 DEECX DELAWARE-EX DR-C 5.310 -2.533
—–
93 SABDX SUMMIT-BOND-I 46.500 -2.561
—–
94 SFBNX SUMMIT-BOND-A 46.650 -2.692
—–
95 VWETX VANGUARD-L IG-AD 8.590 -2.829
—–
96 VWESX VANGUARD-L IG-IV 8.590 -2.868
—–
97 FLC F&C-CLMRE TO RET 17.070 -3.188
—
98 GFITX GMO-STR F IN-III 22.500 -5.502
—–
99 GMFIX GMO-STR F IN-VI 22.480 -5.507
—–
100 EUBIX EVERGREEN ULT. SHT. 8.47 -21.840
———————————————————————
101 SWYSX SCHWAB-YLD +-SEL 6.270 -29.277
—–
102 SWYPX SCHWAB-YLD +-INV 6.270 -29.323
—–
103 FDBIX FEDER-BOND FD-IS 8.630 N.A.
—–
104 USY WISDOMTREE US CI 25.030 N.A.
—
105 PBDPX PIMCO-IN G CR-P 10.220 N.A
—–
106 DRBDX DREYFUS-A BDS + 12.880 N.A.
—–
The statement of claim filed by the Stoltmann Law Offices does not name
Wachovia financial consultants or employees.
According to Mr. Stoltmann, “We believe that the Wachovia employees who
pitched the funds were victims of these products as well. In our view,
the firm unfortunately misled the Wachovia financial consultants and
their clients ended up paying the ultimate financial price.”
Mr. Stoltmann also warned, “Multiple law firms have filed a class
action lawsuit against Wachovia Bank. Evergreen victims are encouraged
to analyze all of their legal options. Class action settlements too
often lead to minimal settlements for clients. Wachovia Evergreen fund
clients must be aware that if they stay in the class action and
recover, they cannot also recover in a FINRA arbitration action.”
