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Heartland Group settles securities case for $14,000,000.
White v. Heartland High-Yield Municipal Bond Fund et al.
On November 13, 2000, Ademi & O'Reilly, LLP filed the first of
twenty-one securities class action lawsuits against the Heartland
High-Yield Municipal Bond Fund (Nasdaq: HRHYX), the Heartland
Short Duration High-Yield Municipal Bond Fund (Nasdaq: HRSDX),
and several individuals in the United States District Court for the
Eastern District of Wisconsin.
The complaint sought damages on behalf of investors who bought
the funds from November 18, 1997 through October 16, 2000 (the
"Class Period"). The complaint alleged that from at least November
18, 1997 to October 16, 2000, Heartland miscalculated and
misrepresented the net asset value ("NAV") of the two funds and the
true risk of investing in them. On October 16, 2000, the funds'
advisers blindsided investors by announcing that they were
drastically writing down the NAV of the funds. Specifically, HRHYX's
NAV was reduced 70% from $8.01 per share to $2.45, and HRSDX's
NAV was reduced 44% from $8.70 per share to $4.87.
On March 15, 2002, a Stipulation of Partial Settlement was executed
on behalf of the Lead Plaintiffs and the Settling Defendants. Pursuant
to the terms of the proposed Partial Settlement, a Settlement Fund in
the amount of $14,000,000 has been established for the benefit of
the Class. A Preliminary Approval hearing was held, and on April 4,
2002, the Honorable Judge Joseph P. Stadtmueller granted
Preliminary Approval of the Settlement. For purposes of the proposed
Partial Settlement only, the following Settlement Class has been
conditionally certified by the Court: "All persons and entities who
purchased or otherwise acquired shares of the Heartland High-Yield
Municipal Bond Fund and/or the Heartland Short Duration High-Yield
Municipal Fund either directly or by dividend reinvestment during the
period from and including January 2, 1997 through and including
October 16, 2000 and sustained a loss thereon."
A Final Approval hearing, to determine whether the proposed Partial
Settlement is fair, reasonable, adequate and in the best interests of
the Settlement Class, was held on July 18, 2002. By Order, dated that
same day, the Honorable Judge Joseph P. Stadtmueller granted final
approval of the Settlement and awarded Plaintiffs' Counsel attorneys
fees and expenses.
Litigation against PriceWaterhouseCoopers, the auditors for
Heartland, is pending.
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