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Easterly Fund Investors May Be Eligible to Recover Their Investment Losses

If you have suffered significant investment losses with the Easterly Fund, our investment loss lawyers may be able to help. We are actively investigating claims against Osaic Wealth and Stifel Nicolaus & Co. involving allegations that these firms misled investors into high-risk investments and failed to protect their clients when things started to go wrong.

The Easterly Fund: What Went Wrong?

The Easterly ROCMuni High Income Municipal Bond Fund (the “Easterly Fund”) was supposed to be a relatively low-risk investment opportunity for income-focused investors. In theory, as a municipal bond fund, the Easterly Fund should have delivered stable, tax-exempt returns for investors looking to manage their wealth and finances in retirement.

However, in reality, the Easterly Fund was very different.

Rather than investing in highly rated municipal bonds, the Easterly Fund invested in lower-rated bonds that carried higher volatility and lower liquidity. When the fund’s managers marked down the value of many of its holdings due to their illiquidity, this triggered a sudden plunge in the fund’s value.

In a matter of months, the Easterly Fund’s Net Asset Value (NAV) plummeted from more than $6.00 per share to less than $3.00 per share. Over this same time period, its assets under management fell from more than $230 million to less than $17 million.

As a result, many Easterly Fund investors suddenly found themselves facing substantial losses.

Since, as now seems to be clear, these losses were due to risk-taking and poor management, investors stand virtually no chance of recovering their losses through market forces. This means that investors must pursue other options.

Issues with the Easterly Fund that Made It Unsuitable for Most Retail Investors

Our investigations have revealed that Osaic Wealth and Stifel Nicolaus & Co. may be liable for many investors’ Easterly Fund losses. This is due to these brokerage firms’ apparent failure to inform investors of the risks associated with investing in the fund. For example:

  • Investment in Lower-Grade Municipal Bonds – As discussed above, while municipal bond funds traditionally invest in highly rated bonds to mitigate investors’ risk, the Easterly Fund invested in municipal bonds with “junk” ratings.
  • Using Leverage that Increased Risk – It appears that the Easterly Fund also heavily relied on leverage in order to increase its buying power. However, this high-risk strategy ended up magnifying the fund’s losses.
  • Engaging in Faulty (and Potentially Fraudulent) Pricing Practices – The Easterly Fund’s faulty (and potentially fraudulent) pricing practices appear to be to blame for the sudden markdown that ultimately triggered the fund’s collapse.

These are risks that are not suitable for most retail investors—and certainly not for investors who are focused on maintaining a steady income in retirement. As a result, our investigations are focused on proving allegations that Osaic Wealth and Stifel Nicolaus & Co. either negligently or intentionally withheld information about these risks from their clients.

Potential Claims Against Brokerage Firms that Sold the Easterly Fund to Unsuspecting Clients

When unsuspecting investors suffer losses due to their brokerage firms’ negligence or fraud, they have clear grounds to pursue claims in FINRA arbitration, which is a unique forum that exists specifically to help defrauded investors recover their losses as efficiently as possible.

Some examples of potential grounds to pursue claims in FINRA arbitration include:

  • Inadequate Due Diligence – Brokers who recommend investments without taking the time to understand the risks involved may be held liable for failing to conduct adequate due diligence.
  • Misrepresentations and Omissions – Brokers who misrepresent or omit material risk-related information when providing investment recommendations can be held liable for fraud.
  • Unsuitable Investment Advice – Providing unsuitable investment advice to generate fees and commissions is a clear form of investment fraud.

Ultimately, whether a broker makes a mistake or attempts to take advantage of his or her clients, the broker can—and should—be held accountable. Keep reading to learn about the steps that Easterly Fund investors can take to seek accountability through the FINRA arbitration process.

5 Steps to Take if You Lost Money Investing in the Easterly Fund

Did you lose money investing in the Easterly Fund? If so, we strongly encourage you to take the following steps as soon as possible:

1. Collect Your Investment Records

You should collect your investment records related to the Easterly Fund dating as far back as possible. With that said, if you aren’t sure how to access these records, our lawyers will be able to help.

2. Collect Any Communications from Your Brokerage Firm

Along with collecting your investment records, you should also collect any communications you still have from your brokerage firm. This includes letters, emails, and other written or recorded communications.

3. Learn More About Your Legal Rights as an Investor

As an Easterly Fund investor, you have clear legal rights. We encourage you to read the Additional Resources linked below for more information.

4. Learn More About FINRA Arbitration

We also encourage you to learn more about the FINRA arbitration process. This article provides an overview of what you can expect if you hire a lawyer to represent you.

5. Schedule a Free Consultation

Hiring a lawyer to represent you starts with scheduling a free consultation. Regardless of what records and communications you are able to collect, we strongly encourage you to contact us right away.

Additional Resources for Easterly Fund Investors

We are committed to helping defrauded investors recover their losses, and right now we are focused specifically on helping Easterly Fund investors. If you need to know more about what went wrong, why it went wrong, and who is responsible, we encourage you to read:

Schedule a Free and Confidential Consultation with an Investment Loss Lawyer Today

If you have questions about seeking to recover your losses from investing in the Easterly Fund, one of our lawyers will be more than happy to explain everything you need to know. To schedule a free and confidential consultation with an experienced investment loss lawyer at Zamansky LLC, please call 212-742-1414 or contact us online now.

 

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