Appendix — Oppenheimer Fund, Inc. v. Sanders

Supreme Court brief1978

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VEC 15 1977

APPENDIX MICHAEL RODAK, JR., CLERK |

Ix THE

Supreme Court of the United States

OCTOBER TERM; 1977

No. 77-335

OPPENHEIMER FUND, INC., OPPENHEIMER MAN-

AGEMENT CORP., OPPENHEIMER & CO., LEON

LEVY, JACK NASH, EDMUND T. DELANEY AND

EMANUEL CELLER,

Petitioners,

—v.—

IRVING SANDERS, EGON TAUSSIG,

MICHAEL SHAEV AND RITA SHAEV,

Respondents.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

PETITION FOR CERTIORARI FILED SEPTEMBER 1, 1977

CERTIORARI GRANTED OCTOBER 31, 1977

Ix THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

No. 77-335

OPPENHEIMER FUND, INC., OPPENHEIMER MAN-

AGEMENT CORP., OPPENHEIMER & CO., LEON

LEVY, JACK NASH, EDMUND T. DELANEY AND

EMANUEL CELLER,

Petitioners,

—v.—

IRVING SANDERS, EGON TAUSSIG,

MICHAEL SHAEV AND RITA SHAEV,

Respondents.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS

POR THE SECOND CIRCUIT

INDEX

PAGE

Chronological List of Relevant Docket Entries A-l

Complaint filed in 69 Civ. 12z————— A-20

Complaint filed in 69 Civ. 2029 A-33

Complaint filed in 69 Civ. 26422 . 4-47

Amended Answer of Defendants Oppenheimer Man-

agement Corp., Oppenheimer & Co., Leon Levy

and Jack Nash filed in 69 Civ. 1242 4-57

Amended Answer of Defendant Oppenheimer Fund,

Inc. filed in 69 Civ. 1242 A-69

Amended Answer of Defendant Edmund T. Delaney

filed in 69 Civ. 1242

Answers Verified March 29, 1973 of Defendants

Oppenheimer Management Corp., et al., to Plain-

tiffs’ Supplementary Interrogatories

Interrogatories dated February 7, 1973 of Defen-

dants Oppenheimer Management Corp., et *

Directed to the Plaintiffs

Plaintiff Sanders’ Anwers to Defendants’ Inter-

rogatories Verified March 27, 1973

Plaintiffs Shaevs’ Answers to Defendants’ Inter-

rogatories Verified March 30, 1973

Plaintiff Taussig’s Answers to Defendants’ Inter-

rogatories Verified April 9, 1973

Plaintiffs’ Notice of Motion for Class Action Treat-

ment dated March 30, 1973 and Supporting Aff-

davit of Donald N. Ruby

Affidavit of Leon H. Tykulsker Sworn to April 13,

1973

Affidavit of Robert Galli Sworn to May 23, 1978

Memorandum of Defendants Oppenheimer Man-

A-81

A-91

A-95

A-98

A-102

A-105

A-109

A-121

A-129

A-133

A-135

A-137

PAGE

Plaintiffs’ Memorandum in Reply to Defendants’

Memorandum of June 25, 1973 Concerning Pro-

posed Discovery in Boston A-139

Affidavit of Donald Ruby Sworn to December 12,

1973 A-142

Affidavit of Donald Ruby Sworn to July 17, 1974. A-150

Opinion of the District Court for the Southern Dis-

triet of New York filed May 15, 1975 PA-la*

Notice of Motion for Reargument of Defendants

Oppenheimer Management Corp., et al., dated

June 9, 1975 A-151

Notice of Motion for Reargument of Defendant

Oppenheimer Fund, Inc. dated June 10, 1975 _._.A-153

Notice of Motion for Reargument of Defendants

Edmund T. Delaney and Emanuel Celler dated

June 10, 1975 A-155

Plaintiffs’ Notice of Motion for Reargument dated

June 10, 1975 A-157

Opinion and Order of the District Court on Reargu-

ment filed October 1, 1975 PA-9a

Notice of Appeal of Defendants Oppenheimer Man-

agement Corp., et al., dated October 27, 1975 — A-159

Notice of Appeal of Defendants Edmund T. Delaney

and Emanuel Celler dated October 27,1975 ...... A-160

PAGE

Opinion of the Three-Judge Panel of the Court of

Appeals ... — — — PA-11a

Order of the Court of Appeals granting Plaintiffs’

Petition for Rehearing En Banc entered on Sep-

fF ee PA-32a

Judgment of the En Banc Panel of the Court of

Appeals entered on June 22, 19777 PA-34a

Deposition of Investment Company Services Cor-

poration (by John C. J. Wouters and Frank

Sebastian) and Additional Information Supple-

menting the Same dated July 18, 1973 and Octo-

ber 10, 1973, respectively . . . . A-163

3-26-69

4-28-69

6— 2-69

6— 9-69

6-17-69

9-16-69

9-23-69

9-29-69

Chronological List of Docket Entries

UNITED STATES DISTRICT COURT

Iwpex or Documents Fu

No. 69 Civ. 1242

Filed complaint.

Filed summons and return.

Filed stipulation and order extending

all defendants time to answer or make

any motion to complaint to 6/1/69.

Filed Oppenheimer Fund, Answer.

Filed answer of Oppenheimer Manage-

ment Corp. et al.

Filed Answer of Defendant, Edmund

T. Delaney.

Filed Plaintiffs’ Jury Demand.

Filed Plaintiffs’ interrogatories to De-

fendants.

Filed Plaintiffs’ notice to take deposi-

tions of Defendants.

Filed stipulation and order that time

for Defendants to answer or serve

motion on Plaintiffs’ interrogatories

is extended from 9/26/69 to 10/8/69

and time for taking of deposition of

Oppenheimer Management Corp. is ad-

journed to 10/10/69.

A-l

No.

10— 9-69

1024-69

11-13-69

11-19-69

11-21-69

11-24-69

11-25-69

A-2

Chronological List of Docket Entries

Filed stipulation and order extending

each Defendant’s time to answer Plain-

tiff's interrogatories to 10/24/69, ete.

Filed stipulation and order extending

each Defendant’s time to answer Plain-

tiff’s interrogatories to 11/12/69, and

changing time for taking of deposition

to 11/14/69.

Filed Defendant Oppenheimer Fund’s

answers to Plaintiff's interrogatories.

Filed Oppenheimer Defendants’ an-

swers to interrogatories of Plaintiff

dated 9/10/69.

Filed Order to Show Cause re: Con-

solidate. Ret. 11/25/69 ( Also in 69 Civ.

2029 and 69 Civ. 2642).

Filed Defendant’s Memorandum in

support of motion to consolidate (Also

in 69 Civ. 2029 and 69 Civ. 2642).

Filed Affidavit on motion to consol-

idate (Markowitz).

Filed Answering Affidavit on motion

to consolidate (Milberg).

Filed Affidavit on motion to consol-

idate (Ruby).

Filed Affidavit in support of motion

(Bertin).

Document

No.

12-17-69

1- 9-70

423-70

4-29-70

5-13-70

1-24-73

2- 8-73

3 5-73

3 9-73

3-30-73

A-3

Chronological List of Docket Entries

Filed Memo. End. and Order Consol-

idating actions 69 Civil 1242, 69 Civil

2029 and 69 Civil 2642 for all purposes

into action 69 Civil 1242.

Filed Defendant Edmund T. Delaney’s

answers to Interrogatories dated

9/10/69.

Filed Stipulation and Consent to sub-

stitution of attorneys for Defendant

Delaney.

Filed Plaintiff’s interrogatories.

Filed Stipulation and Consent to Sub-

stitution of Attorneys for Defendant

Celler.

Filed Defendant, Oppenheimer Man-

agement Corp., et al’s, Interrogatories

directed to the Plaintiffs.

Filed Defendants Oppenheimer Man-

agement Corp. et al. Interrogatories

addressed to the Plaintiffs.

Filed Stipulation and Order that the

Plaintiffs time to answer Defendants’

Interrogatories is extended to 3/30/73.

Filed Plaintiffs’ Supplementary Inter-

rogatories.

Filed Answers of Defendants Oppen-

heimer Management Corp., et al. to

Plaintiffs’ Supplementary Interrog-

atories.

Document

No.

3-30-73

4 4-73

4 6-73

4- 6-73

4-10-73

Chronological List of Docket Entries

Filed Defendant Oppenheimer Fund,

Inc. Answer Supplementary Interrog-

atories.

Filed memo endorsed on Defendants

Oppenheimer Management Corp., et

al., Affidavit and Notice of Motion per-

mitting said Defendants to amend

Answers, Returnable 4/18/73.

Filed Plaintiff's Notice of Motion re:

class action, ret.: 4/18/73.

Filed Plaintiffs’ Memcrandum of Law

in support of motion to have this suit

declared as class action.

Plaintiff Sanders Answers to Defen-

dants’ Interrogatories.

Plaintiff Shaev Answers to Defen-

dants’ Interrogatories.

Plaintiffs’ Answers to Interrogatories

dated 12/18/72.

Filed memorandum of Defendants’,

Oppenheimer Management Corp., et

al., in support of motion for leave to

amend their answers.

Filed motion of Defendants Oppen-

heimer Management Corp. et al., pur-

suant to Fed. Rule 37 and endorsement

dated 5/15/74.

No.

4/16/73

4-16-73

4-17-73

4-24-73

5- 4-73

5-21-73

A-5

Chronological List of Docket Entries

Affidavit submitted in behalf of Oppen-

heimer Defendants in connection with

Plaintiff's class action motion.

Memorandum of Oppenheimer Defen-

dants in connection with Plaintiffs

class action motion.

Affidavit submitted on behalf of un-

affiliated Defendants in connection

with Plaintiffs’ class action motion.

Memorandum of unaffiliated Defen-

dants.

Filed memo endorsed on Defendant

Oppenheimer Fund, Ine.’s notice of

motion and affidavit re: amendment to

answer ret: 5/7/73; granted on con-

sent at hearing on 5/23/73.

Filed Affidavit submitted on behalf of

Defendant Oppenheimer Fund, Inc., in

connection with Plaintiffs’ class action

motion.

Filed Plaintiff Taussig’s answers to

Defendants’ Interrogatories.

Affidavit of Donald N. Ruby in opposi-

tion to motion pursuant to Federal

Rule 37.

Plaintiffs’ Memorandum in opposition

to Federal Rule 37 motion.

Document

No.

5-21-73

5-21-73:

5-21-73

5-23-73

6- 5-73

6— 5-73

6— 8-73

6-14-73

6-20-73

Chronological List of Docket Entries

Supplemental memorandum of the Op-

penheimer Defendants in connection

with Plaintiffs’ class action motion.

Plaintiffs’ reply Memorandum in sup-

port of motion for class action.

Opposing Affidavit of Robert Galli

dated May 23, 1973.

Letter on behalf of Oppenheimer Fund

in connection with Plaintiffs’ class

action motion.

Filed Defendants Oppenheimer Man-

agement Corp., et al., amended Answer

to the Complaint (69 Civ. 1242).

Filed Defendants Oppenheimer Man-

agement Corp., et al., amended Answer

to the Complaint (69 Civ. 2029).

Filed Defendants Oppenheimer Man-

agement Corp., et al., amended Answer

to the Complaint (69 Civ. 2642).

Letter dated June 6, 1973 re discovery.

Letter dated June 8, 1973 re discovery.

Letter dated June 14, 1973 re dis-

covery (WPRWJ).

Letter dated June 14, 1973 re dis-

covery (GU).

Filed Defendant Oppenheimer Fund,

Ines, amended Answer (69 Civ. 1242).

Documeni

No.

6-20-73

6-25-73

6-26-73

8-16-73

8-31-73

9- 6-73

9 6-73

Chronological List of Docket Futries

Filed Defendant Oppenheimer Fund,

Inc.’s, amended Answer (69 Civ. 2029).

Filed Defendant Oppenheimer Fund,

Ine.’s, amended Answer (69 Civ. 2642).

Filed amended answer of Defendants

Edmund T. Delaney and Emanuel

Celler (69 Civ. 2642).

Filed Defendant Edmund T. Delaney’s

amended Answer (69 Civ. 1242).

Filed amended Answer of Defendants

Delaney and Celler (69 Civ. 2029).

Filed in court, Defendants Oppen-

heimer Memo.

Plaintiffs Memorandum reply re dis-

covery.

Letter of 6/25/73 re discovery.

Letter of 6/26/73 re discovery.

Filed transcript of record of proceed-

ings, dated May 23, 1973.

Filed notice of change of address, of

Oppenheimer Fund (Defendant) At-

torney.

Filed consent and order of substitution

of Attorneys for Defendant, Emanuel

Celler.

Filed Stipulation and Order substi-

tuting attorneys for Edmund Delaney,

Defendant.

283

A-8 A-9

Chronological List of Docket Entries Chronological List of Docket Entries

ae 1 “we

0. 8 0.

9-21-73 Filed copy of order of 9/6/73 (re: 12-20-73 Filed Defendant Oppenheimer Man-

Edmund T. Delaney). 74 agement Corp. et al.’s, supplemental

9-21-73 Filed copy of order of 9/6/73 (re: poe hi re: Plaintiffs’ class action

Emanuel Celler). 75 ’ 85

10-10-73 Filed copy of order signed 9/5/73 (re: 12-21-73 Filed Defendant, Oppenheimer’s, memo

Edmund T. Delaney) 76 in opposition to Plaintiffs’ class action

* motion. 86

10-10-73 Filed copy of order signed 9/5/73 (re: e

ers erb. 77 1 3-74 Plaintiffs’ Supplemental Reply Memo-

randum of Law. 87

11-27-73 Filed memorandum of unaffiliated De-

fendants on class action motion. 78 1-18-74 Filed Affidavit of Service by Mail—

4 served supplemental memorandum. 88

11-28-73 Filed memorandum of the Oppen-

heimer Defendants on class motion and (-16-14 Memorandum of Defendant Oppen-

for further proceedings 79 heimer Fund regarding costs of Iden-

* tity of Members of the Class. 89

12 4-73 Filed memo endorsement on Defen-

dants’ (Delaney and Celler) Affidavit 717-74 — 1 — Defen-

and Notice of Motion permitting said ants re costs of identifying. 90

Defendants to amend answers—Re- 7-17-74 Letter dated July 17, 1974 of informa-

turnable 4/19/73. 80 tion requested (GU). 91

12- 473 Filed Affidavit of Donald Ruby in 7-17-74 Filed additional memo of Defendants

answer to Defendants’ motion to (Oppenheimer Management Corp., et

amend. 81 al.) re: class action motions. 92

12-13-73 Affidavit of Donald N. Ruby dated 7-17-74 Filed Plaintiffs’ Affidavit in response

December 12, 1973. 82 to Court’s request for further informa- mae

12-13-73 Plaintiffs’ supplemental memorandum tion re: damages to class. 93

of law in support of motion for class 7-17-74 Filed Plaintiffs’ second supplemental

action. 83 memo of law in support of motion for

12-19-73 Supplemental Memorandum on behalf class action determination. 94

of unaffiliated Defendants. 84

7-24-74

7-26-74

5-15-75

6— 2-75

6 9-75

6— 9-75

6-11-75

A-10

Chronological List of Docket Entries

Filed Defendants’ (Oppenheimer Man-

agement), memo in answer to Plain-

tiffs’ supplemental memo re: class

action motion.

Reply Memo of Defendant Oppen-

heimer Fund.

Reply Memo of unaffiliated Defen-

dants.

Filed Plaintiffs’ memo in response to

additional memoranda submitted by

Defendants on 7/17/74 in connection

with Plaintiffs’ motion for class action

determination.

Filed Opinion No, 42424 of Judge

Griesa.

Filed Stipulation and Order extending

to 6/10/75 for reargument re: Plain-

tiffs’ motion for class action deter-

mination.

Filed Defendants Oppenheimer Man-

agement Corporation et al.’s, Notice of

Motion to Reargue Class Action Mo-

tion.

Filed Memo of Defendants Oppen-

heimer Management Corporation et al.,

in support of Motion to Reargue Class

Action Motion.

Filed Plaintiffs’ Notice of Motion per-

mitting reargument re: giving notice

Document

No.

100

101

102

6-11-75

6-20-75

6-24-75

A-ll

Chronological List of Docket Entries

to class members who are still share-

holders.

Filed Plaintiffs’ Memo in support of

motion for re-argument.

Filed Defendant (Oppenheimer Fund)

notice of motion for re-argument.

Filed Defendant (Oppenheimer Fund)

memo in support of motion for re-

argument.

Filed notice of motion of unaffiliated

defendants to reargue.

Filed Memorandum of unaffiliated de-

fendants in support of motion to re-

argue.

Filed Defendants Oppenheimer Man-

agement Corporation et al., answering

memo re Plaintiffs’ motion for re-

argument.

Filed Defendant Oppenheimer Fund’s

memo of law in opposition to Plaintiffs’

motion for re-argument.

Filed Plaintiffs’ memo in opposition to

Defendants motion for re-argument.

Filed Stipulation and Order extending

to 6/30/75 Plaintiffs time to serve

further answers to Interrogatories of

Defendants (Oppenheimer Manage-

ment, et al).

Filed Plaintiffs reply memo in sup-

port of motion for re-argument with

103

104

105

106

107

108

109

110

111

112

— . asm

10-10-75

10-28-75

10-30-75

10-24-75

10-28-75

10-30-75

11-24-75

A-12

Chronological List of Docket Entries

respect to method of giving notice to

certain members of the class.

Filed Opinion #43169, October 1, 1975,

on Motions for re-argument of 5/15/75

Opini

Filed Defendants’, Oppenheimer Man-

agement Corp., et al., Notice of Appeal

to USCA from order dated 9/30/75

and entered 10/1/75.

Filed Defendants’, E. T. Delaney and

E. Celler’s Notice of Appeal to USCA

from order dated 9/30/75.

Filed Defendant, Oppenheimer Fund,

Inc., Notice of Appeal to USCA, from

Order filed October 1, 1975.

Filed Plaintiffs further Answers to

Interrogatories.

Undertaking of Leon Levy et al., for

Costs on Appeal.

Undertaking of Oppenheimer Fund.

Stipulation with respect to copies of

missing documents.

Document

No.

114

115

116

117

118

UNITED STATES DISTRICT COURT

5-13-68

11-21-69

6— 3-69

6-25-69

6-27-69

6-24-69

7-16-69

9-15-69

11-13-69

11-18-69

12- 9-69

A-13

Chronological List of Docket Entries

Iypex or Documeyrrs Fund

No. 69 Civ. 2029

Filed Complaint.

Filed return on service and summons.

Stipulation and Order Extending Time

of Oppenheimer Defendants to answer.

Answer of Defendants Emanuel Celler

and Edmund T. Delaney.

Answer of Defendants Oppenheimer

Management Corp. et al.

Answer of Defendant Oppenheimer

Fund, Ine.

Stipulation and Order extending time

of defendants to answer Plaintiff's

Interrogatories.

Answer of Oppenheimer Management

Corp., et al. to Plaintiffs’ Interrog-

atories.

Answers of Defendant Oppenheimer

Fund, Inc. to Interrogatories.

Amendment of Oppenheimer Manage-

ment Corp., et al’ answer to Interrog-

atories.

Answer of Defendants Edmund T.

Delaney and Emanuel Celler to Inter-

rogatories.

128

130

A-14

Chronological List of Docket Entries

UNITED STATES DISTRICT COURT

6-18-69

8-29-69

9-29-69

9-25-69

9-29-69

10-29-69

10-31-69

11-10-69

11-12-69

11-18-69

11-19-69

Inpex or Documents Fun

No. 69 Civ. 2642

Filed Complaint.

Stipulation and Order extending time

of Oppenheimer Management Corp., et

al. to answer. .

Answer of Defendant Oppenheimer

Fund, Ine.

Answer of Defendant Oppenheimer

Management Corp., et al.

Stipulation and Order extending time

of Defendants to answer.

Answer of Defendants Delaney and

Celler.

Filed Stipulation and Order re time to

answer.

Plaintiffs Interrogatories.

Plaintiffs’ Notice to Take Deposition

of Defendants.

Answer of Defendants Oppenheimer

Management Corp., et al. to Plaintiffs’

Interrogatories.

Answers of Defendant Oppenheimer

Fund to Plaintiffs’ Interrogatories.

Document

No.

133

134

135

136

137

1- 9-70

6-18-69

8 6-69

A-15

Chronological List of Docket Entries

—

Answer of Defendants Delaney and

Celler to Plaintiffs’ Interrogatories. 144

Filed Affidavit and Order re appoint-

ment of private process server (#1). 145

Filed Affidavit and Order re appoint-

ment of private process server (#2). 146

A-16

Chronological List of Docket Entries

UNITED STATES COURT OF APPEALS

10-31-75

11-24-75

12-10-75

12-29-75

1 9-76

2-23-76

3-15-76

Docket Entries

No. 75-7608

Filed copies of docket entries and notice of

appeal (Delaney and Celler)

Filed copies of docket entries and notice of

appeal (Oppenheimer Fund, Inc.)

Filed copy of notice of appeal (Oppenheimer

Management Corp., Oppenheimer & Co., Leon

Levy and Jack Nash)

Filed record (original papers of district court)

Filed exhibit volumes, (3cc.)

Filed designation of additional parts of record

to be included in appendix, appellees, w/pfs

Filed brief, appellants, with proof of service

(Oppenheimer Management Corp., Oppen-

heimer & Co., Levy and Nash) (& in 75-7610,

75-7611)

Filed brief, appellants, with proof of service

(Oppenheimer Fund, Inc.) (& in 75-7610,

75-7611)

Filed brief, appellants, with proof of service

(Delaney and Celler) (& in 75-7610, 75-7611)

Filed joint appendix, with proof of service

Filed brief, appellees, w/pfs

Filed reply briefs, appellant, pfs (Delaney and

Celler)

3-15-76

5— 5-76

6-30-76

7-13-76

7-21-76

9-14-76

9-22-76

9-24-76

9-27-76

10— 5-76

A-17

Chronological List of Docket Entries

Filed reply briefs, appellant, pfs (Oppenheimer

Management Corp., et al)

Argument heard (By: Mulligan, Hayes, C.JJ.,

Paimieri, D. J.)

Order affirmed in part, reversed in part, Pal-

mieri, J.D. (& in 75-7610, 75-7611)

Dissenting in part in separate opinion, Hays,

CJ (& in 75-7610, 75-7611)

Filed judgment (& in 75-7610, 75-7611)

Filed order granting leave to file petition for

rehearing and rehearing en bane by 7-21-76

Filed petition for rehearing and rehearing en

banc, appellee, pfs

Filed order granting petition for rehearing en

banc; appellant’s briefs by 10-5-76; appellee’s

briefs by 10-19-76; appellant’s reply briefs by

10-22-76; action will be deemed submitted on

10-22-76

Filed motion to file an amicus curiae brief by

10-22-76, w/pfs (American College of Trial

Lawyers)

Filed affidavit in opposition to motion to file an

amicus brief

Filed order granting leave to file an amicus

curiae (American College of Trial Lawyers)

by 10-12-76

Filed 25 copies brief, appellants, w/pfs (on

rehearir z) (Oppenheimer Management Corp.,

10— 5-76

10 5-76

10-12-76

10-19-76

10-22-76

622-77

6-22-77

| A-18

Chronological List of Docket Entries

Oppenheimer & Co., Leon Levy and Jack

Nash)

Filed 25 copies brief, appellants, w/pfs (on

rehearing) (Edmund T. Delaney and Emanuel

Celler)

Filed 25 copies brief, appellant, w/pfs (on re-

hearing) (Oppenheimer Fund, Inc.) .

Filed amicus curiae brief, pfs (American College

of Trial Lawyers)

Filed 25 copies brief, appellees, w/pfs (on re-

hearing)

Filed 25 copies reply brief, appellants, w/pfs

(on rehearing) (Oppenheimer Management

Corp., Oppenheimer & Co., Leon Levy and

Jack Nash)

Filed 25 copies reply brief, appellant, w/pfs (on

rehearing) (Oppenheimer Fund, Inc)

Filed 25 copies reply brief, appellants, w/pfs

(on rehearing) (Edmund T. Delaney and

Emanuel Celler)

Action Submitted (before: Kaufman, Ch.J.,

Hays, Feinberg, Mansfield, Mulligan, Oakes,

Timbers, Gurfein, Van Graafeiland, Meskill,

CJJ) (& in 75-7610, 75-7611)

On Rehearing en banc, Judgment affirmed, Hays,

CJ (& in 75-7610, 75-7611)

Dissenting in Separate Opinion, Mulligan, CJ

(& in 75-7610, 75-7611)

Filed judgment

7— 6-77

8 4-77

9 6-77

11 7-77

A-19

Chronological List of Docket Entries

Filed motion to stay the mandate, w/pfs, appel-

lants

Filed order granting stay of mandate pending

application to Supreme Court for writ of

certiorari

Filed notice of filing of petition for writ of

certiorari (SC#77-335)

Filed certified copy of order of Supreme Court

granting petition for writ of certiorari (SC

#77-335)

A-20

Complaint

No. 69 Civ. 1242

UNITED STATES DISTRICT COURT

For tHe Sovruern District or New York

Irvine SANDERS,

Plaintiff,

— 8 —

Leon Levy, Jack Nasu, Epmunp T. DLAN RT, EAN URL

Ceiuer, ERIC Havser, JosepH M. MeDax L, Jg., Smyey

M. Rossrys, OpPpENHEIMER MANAGEMENT CORPORATION,

OppenHEmmer & Company, and OprENHEIMER F'unn, Inc.,

Defendants.

Plaintiff by Wolf Popper Ross Wolf & Jones as attorneys

for his complaint herein alleges upon information and be-

lief, except as to Paragraph “1” which he alleges upon

knowledge:

1. Plaintiff Irving Sanders made the following purchases

of shares of Oppenheimer Fund, Inc., subsequent to March

15, 1968: 6.526 shares at a price of $7.24 per share on

March 29, 1968; 5.657 shares at a price of $8.22 per share on

May 1, 1968; 5.607 shares at a price of $8.56 per share on

May 28, 1968; 4.196 shares at a price of $8.94 per share on

June 21, 1968; 5.456 shares at a price of $8.66 per share on

June 28, 1968; 5.72 shares at a price of $8.26 per share on

July 30, 1968; 5.585 shares at a price of $8.46 per share on

August 29, 1968; 5.059 shares at a price of $9.34 per share

on September 27, 1968; 5.053 shares at a price of $9.35 per

A-21

Complaint

share on October 31, 1968; 4.609 shares at a price of $10.09

per share on December 5, 1968; 4.817 shares at a price of

$9.81 per share on January 3, 1969; and 4.984 shares at a

price of $9.63 per share on January 29, 1969.

2. Plaintiff brings this action representatively on behalf

of himself and all other persons similarly situated who pur-

chased shares of Oppenheimer Fund, Inc. subsequent to

March 15, 1968. The aforesaid purchagers of shares of Op-

penheimer Fund, Ine. constitute a class so numerous that

joinder of all members is impractical. There are questions

of law or of fact common to the class. The claims of the

plaintiff are typical of the claims of the class and the plain-

tiff will fairly and adequately protect the interests of the

class.

3. The acts complained of herein constitute violations of

Sections 12 (2) and 17 of the Securities Act of 1933 (15

U.S.C. §§ 771 and 77q, Section 10 (b) of the Securities Ex-

change Act of 1934 (15 U.S.C. §78j(b)) and Rule 10b-5

promulgated thereunder by the Securities & Exchange

Commission (17 CFR 240.10b-5), Sections 22, 30 and 37 of

the Investment Company Act of 1940 (15 U.S.C. 58 80a-22,

80a-29, and 80a-36) and Rules promulgated thereunder by

the Securities & Exchange Commission. This Court has

jurisdiction of this action under Section 27 of the Securities

Exchange Act (15 U.S.C. § 78aa) Section 44 of the Invest-

ment Company Act (15 U.S.C. § 80a-43) Sections 1331 and

1337 of che Judicial Code (28 U.S.C. §§ 1331 and 1337). In

addition, jurisdiction is based on the doctrine of pendent

jurisdiction.

4. Oppenheimer Fund, Inc. (hereinafter referred to as

the Fund“) is an open-end diversified investment company

A-22

Complaint

of the management type, incorporated under the laws of the

State of New York, with its principal place of business at

5 Hanover Square, New York, New York. The Fund is

registered under the Investment Company Act of 1940. The

shares of the Fund have been offered for sale and have

been sold to the public on a continuous basis since Maren 15,

1968. The shares may be purchased at the public offering

price which allegedly represents the net asset value of said

shares plus a stated sales charge. As of December 31, 1968,

there were 26,741,767 shares of the Fund issued and out-

standing of which more than 5,000,000 shares were issued

subsequent to March 15, 1968. Each share is entitled to one

vote.

5. The individual defendants are the directors of the

Fund.

6. Oppenheimer Management Corporation (hereinafter

referred to as “Management Corporation”’) is a corporation

organized under the laws of the State of New York with its

principal place of business at 20 Exchange Place, New

York, New York. The Management Corporations acts as

an Investment Adviser to the Fund and as general dis-

tributor of the Fund shares.

7. Oppenheimer & Co. is a partnership organized under

the laws of the State of New York, having its principal

place of business at 5 Hanover Square, New York, New

York. It is a member firm of the New York Stock Exchange.

Oppenheimer & Co. owns approximately 82% of the out-

standing stock of the Management Corporation including

all of the voting stock of the Management Corporation. The

remaining approximately 18% of the outstanding stock of

the Management Corporation is owned by members of the

2 —

A-23

Complaint

immediate families of certain partners or former partners

of Oppenheimer & Co. who are not personally active in the

business of the Management Corporation.

8. Oppenheimer & Co. is the largest holder of shares of

the Fund. Oppenheimer & Co., its individual partners, the

Management Corporation and the directors and officers of

the Fund and their families own approximately 85,292

shares of the Fund. In addition, Oppenheimer & Co. own,

of record, 13,032 shares as nominees for its clients.

9. All officers of the Fund are either partners or employ-

ees of the Management Corporation or Oppenheimer & Co.

10. Defendant Leon Levy, who is a director and presi-

dent of the Fund, is a partner of Oppenheimer & Co. and a

director of Oppenheimer Management Corporation. De-

fendant Jack Nash, who is a director of the Fund, is a

partner of Oppenheimer & Co. and a vice-president and

secretary of Oppenheimer Management Corporation. De-

fendant Edmund T. Delaney, who is a director of the Fund,

is a partner in the law firm which is counsel for the Fund.

11. The Fund’s investments are managed by the Manage-

ment Corporation under the provisions of a management

agreement between the Fund and the Management Corpo-

ration. The Fund pays a management fee to the Manage-

ment Corporation which is divided into two parts: a basic

fee based on net asset value plus a fee based on investment

performance. The basic fee is payable monthly and is com-

puted on the net asset value of the Fund as of the close of

business each day. The performance fee is computed each

year by comparing the prior year’s performance of the

Fund with the Standard & Poor’s composite stock price

A-24

Complaint

Index for 500 stocks for the same period. A performance

fee will be paid to the Management Corporation when the

Fund outperforms the Index. If the performance of the

Fund does not equal the Index performance for the year,

the Management Corporation must give the Fund a refund.

12. On or about March 15, 1968, the defendants (other

than the Fund) directly and indirectly caused the Fund to

file a prospectus for the sale of shares of the Fund and

thereafter said defendants caused to be sold shares in the

Fund by means of said prospectus dated March 15, 1968

and said prospectus, as revised, dated September 3, 1968, by

the use of the mails and other instrumentalities in inter-

state commerce.

13. The aforesaid prospectus and said prospectus, as re-

vised, were false and misleading in that they omitted or

failed to state the following material facts which were ne-

cessary in order to make the statements, contained in said

prospectus and said prospectus, as revised, in light of the

circumstances under which they were made, not misleading:

A. That the Fund would invest in restricted securi-

ties which are commonly referred to as “letter of in-

vestment securities” ;

B. That the following special factors should be con-

sidered in connection with the purchase of restricted

securities by the Fund:

1. The Fund will not be able to publicly sell its

restricted securities without first registering them

under the Securities Act of 1933.

2. To realize the benefit from the difference be-

tween the purchase price of restricted securities and

A-25

Complaint

the market price of freely marketable securities of

the same class, such restricted securities must be sold

to the public after registration under the Securities

Act of 1933.

3. The process of preparing a registration state-

ment for restricted securities and having it become

effective under the Securities Act of 1933, may in-

volve a considerable period of time.

4. A considerable period of time may elapse be-

tween the time a decision is made to sell restricted

securities and the time when the sale may actually be

made.

5. The Fund may be unable to sell restricted se-

eurities to the public when it wishes to do so because

registration under the Securities Act of 1933 may not

have become effective.

6. The Fund’s decision to sell restricted securities

may be based on factors other than strictly invest-

ment considerations and the Fund may be precluded

from selling its securities at the most opportune

time.

7. The Fund is likely to ineur higher costs in the

sale of restricted securities than would be incurred

if such securities had been readily marketable.

8. The sale of restricted securities will in most

cases require the service of an underwriter. As a

result, in most cases the Fund will receive from the

sale of restricted securities a net price below the

market price of unrestricted securities of the same

class.

A-26

Complaint

9. Investment in restricted securities involves

greater risk than investment in other securities.

14. Subsequent to March 15, 1968, the defendants directly

and indirectly caused the Fund to purchase various re-

stricted securities including the following: 50,000 shares of

Unexcelled, Inc.; 28,000 shares of Trans-lux Corp.; 5,000

warrants of Saxon Paper Corp.; $1,000,000 of Saxon In-

dustries Senior Subordinated Convertible Notes ; $2,000,000

of U.S. Financial Convertible Subordinated Notes ; 496,000

warrants of Gulf & Western Industries; and 47,000 shares

of Downe Communications, Inc.

15. During the period from March 15, 1968 to date, the

defendants other than the Fund, singly and in concert, have

violated Section 10(b) of the Securities Exchange Act and

Rule 10b-5 promulgated thereunder in that by the use of

the mails and instrumentalities of interstate commerce, and

in connection with the purchase and sale of shares of the

Fund, they have directly and indirectly employed devices,

schemes and artifices to defraud; they have made untrue

statements of material facts, or have omitted to state ma-

terial facts necessary in order to make statements made, in

light of the circumstances under which they were made, not

misleading and they have engaged in acts, practices and a

course of conduct which was intended to and did operate as

a fraud upon the plaintiff and other persons similarly situ-

ated.

16. As part of the aforesaid acts and transactions re-

ferred to in Paragraph 15 above, said defendants caused

the Fund to file the aforesaid prospectus dated March 15,

1968 and said prospectus as revised September 3, 1968,

which were false and misleading as aforesaid.

A-27

Complaint

17. As part of the said acts and transactions, said de-

fendants pursuant to a common plan and scheme caused the

Fund to purchase restricted securities as referred to in

Paragraph 14 above.

18. As part of the said acts and transactions, said de-

fendants pursuant to a common plan and scheme caused the

assets of the Fund and most particularly the restricted se-

eurities or letter of investment securities of the Fund to be

valued at a false, inflated and exaggerated amount on the

books and records of the Fund.

19. As part of the said acts and transactions, said defen-

dants pursuant to a common plan and scheme caused the

Fund to issue periodic and annual reports which were false

and misleading in that the aforementioned restricted se-

eurities were evaluated in said reports at a false, inflated

and exaggerated amount.

20. As part of the said acts and transactions, said defen-

dants caused the Fund to pay to the Management Corpora-

tion excessive fees under the management agreement in

that said fees were based upon false, inflated and exagger-

ated net asset values and a false, inflated and exaggerated

investment performance. Said actions on the part of the

defendants also constituted an unlawful and wilful con-

version by said defendants of the monies, funds, properties

and assets of the Fund in violation of Section 37 of the

Investment Company Act.

21. As a result of the foregoing, plaintiff and all other

persons similarly situated, in reliance upon the evaluation

by said defendants of the assets of the Fund and upon the

aforesaid prospectuses and other reports caused by said

A-28

Complaint

defendants to be issued by the Fund, were fraudulently

caused by pay false, inflated and exaggerated amounts for

their shares of the Fund, which amounts did not truly re-

flect the net asset value of said shares of the Fund.

22. The aforesaid conduct of said defendants constituted

a gross fraud and a violation of their fiduciary duties to

the plaintiff and to other persons similarly situated and

was in wanton disregard of the damage or injury to plain-

tiff and all other persons similarly situated.

23. By reason of the foregoing acts of said defendants,

the plaintiff and all other persons similarly situated who

purchased shares of the Fund since March 15, 1968 have

been damaged in an amount in excess of $1,000,000.

Count Two

Plaintiff repeats and realleges each and every allegation

contained in Paragraphs 1 and 3 through 20 with the same

force and effect as if set forth at length herein.

24. Plaintiff brings this action derivatively in the right

of and for the benefit of the Fund.

25. Plaintiff has been the owner of shares of the Fund

at the time of the transactions complained of herein and

continuously to date.

26. This action is not brought collusively to confer juris-

diction on this Court which it otherwise would not have.

27. As part of the aforesaid acts and transactions, defen-

dants Management Corporation, Oppenheimer & Co. and

Levy, Nash and Delaney failed to disclose to other directors

A-29

Complaint

of the Fund the true value of the restricted securities pur-

chased by the Fund as aforesaid.

28. As a result of the foregoing acts, said defendants

have caused the Fund to redeem shares of the Fund for

false, inflated and exaggerated amounts, which amounts did

not truly reflect the net asset value of said shares of the

Fund.

29. By reason of the foregoing acts, the Fund has been

damaged in an amount in excess of $1,000,000.

30. The aforesaid conduct of the defendants constituted

a gross fraud and a violation of their fiduciary duties to the

Fund and evidenced a complete indifference to their obliga-

tions to the Fund, and was in wanton disregard of the dam-

age or injury to the Fund.

31. By reason of the foregoing acts, Management Cor-

poration, Oppenheimer & Co. and some of the individual

defendants have made substantial profits and the Fund has

suffered substantial damage. The precise amount of said

profits and damages are unknown to plaintiff and can be

determined only upon an accounting in this action.

32. By reason of the premises, the investment advisory

contract and the general distribution contract between the

Fund and the Management Corporation is illegal and void

under Section 47(b) of the Investment Company Act.

33. A. Demand on the Board of Directors of the Fund to

bring this action would be futile since all of the members of

the Board of Directors participated in, authorized or ac-

quiesced in the actions and transactions complained of

A-30

Complaint

herein. They have taken no steps to prevent any of the

wrongs complained of or to seek redress therefor. Further-

more, the members of the Board of Directors are them-

selves defendants in this action. Any demand upon them to

redress the wrongs herein complained of would, in effect,

constitute a demand that they bring the action against

themselves and would have been futile.

B. Demand upon the stockholders of the Fund to

bring this action is unnecessary and would be futile because

(1) under the Charter and By-laws of the Fund,

the management of its affairs including the

bringing of suits is entrusted to the Board of

Directors and not the stockholders. The stock-

holders cannot by resolution or otherwise re-

quire the Fund or its Board of Directors to

bring action.

(2) A stockholder resolution demanding the

bringing of a suit would be futile since the

control of the action would be in the hands of

the very persons who are alleged to be wrong-

doers and cannot properly be prosecuted by

them.

Wuenrerorg, plaintiff demands judgment as follows:

A. Holding all of the defendants other than the

Fund jointly and severally liable for all damages which

the plaintiff and all other persons similarly situated

have sustained by virtue of the acts and transactions

complained of in Count One herein;

B. Holding all of the defendants other than the Fund

jointly and severally liable for all of the damages which

A-31

Complaint

have been sustained by the Fund by virtue of the acts

and transactions complained of in Count Two herein;

C. Requiring the defendants other than the Fund

jointly and severally to account to the Fund for all

profits made by them as a result of the acts and trans-

actions complained of in Count Two herein;

D. Declaring the Investment Advisory Agreement

or any extentions or modifications thereof between the

Management Corporation and the Fund to be null and

void;

E. Awarding to plaintiff the costs and disbursements

of this action including reasonable attorneys’ fees and

accountants’ fees;

F. Granting such other and further relief as to this

Court may seem just and proper.

Wour Porrer Ross Worlr & Jonzs

By: /s/ Dona N. Rusy

A Member of the Firm

Attorneys for the Plaintiff

Office and P.O. Address

845 Third Avenue

New York, N.Y. 10022

PL. 9-4600

A-32

Complaint

Srate or New York,

County or New York, 8s.“

Invinc Sanvers, being duly sworn, deposes and says that

he is the plaintiff in the within action; that he has read the

foregoing complaint and knows the contents thereof; that

said complaint is made on information and belief but that

he believes it to be true.

/s/ Irvine SanpERs

Invinc SANDERS

[Sworn to March 25, 1969]

A-33

Complaint

No. 69 Civ. 2029

UNITED STATES DISTRICT COURT

SoutHern District or New York

Econ Tavssia,

Plaintiff,

—against—

Smney M. Rossins, Entre Hauser, Murray Granam, EMA-

NUEL CELLER, JosePpH M. MDAX I., Ja., Jack Nasu,

Epmunp T. Devaney, Leon Levy, Oppennemer Man-

AGEMENT CorPporRATION, OPPENHEIMER & Company, and

OpreNHEIMER F'unp, Inc.,

Defendants.

Plaintiff Demands Trial by Jury

Plaintiff, by his attorneys, Leibowitt, Milberg, Weiss &

Fox, for his complaint herein, alleges the following on in-

formation and belief except as to paragraphs 1, 2, 3 and

4(b), all of which are alleged on knowledge.

Count I

1. Plaintiff owns shares of the capital stock of Oppen-

heimer Fund, Inc. (hereinafter “The Fund”) and was such

shareholder at the times of the transactions with which this

complaint deals.

2. Plaintiff brings this action derivatively in behalf of

himself and all other Fund stockholders similarly situated

and in behalf of and in the right of the Fund.

434

Complaint

3. The action is not brought collusively to confer on

this Court jurisdiction which it would not otherwise have.

4. (a) The action arises under the Investment Company

Act of 1940 (“Investment Company Act”), the Securities

Exchange Act of 1934, as amended (“Exchange Act”) and

the Securities Act of 1933 as amended (“Securities Act”)

and the rules and regulations promulgated under each of

the aforesaid statutes. Jurisdiction is based on Section 44

of the Investment Company Act, Section 27 of the Ex-

change Act and Section 22 of the Securities Act and on

principles of pendent jurisdiction.

(b) Plaintiff is a citizen of the State of New York.

stantial part in the State of New York.

5. The Fund is a corporation organized under the laws

of New York. It is an open-end non-diversified manage-

ment investment company registered as an investment

company under the Investment Company Act. It has its

principal place of business in the Southern District. At

September 31, 1968, 24,816,792 shares were issued and out-

standing. The Fund has many thousands of shareholders

who are located throughout the United States of America

and abroad.

6. (a) At ail relevant times Oppenheimer Management

Corporation (Manager“) was a New York corporation.

It has its principal place of business in the Southern Dis-

trict. Oppenheimer & Company, a New York partnership

(“Partnership”) owned over 80% of the stock of Manager.

This stock included 100% of the voting stock. The balance

of Manager’s stock is owned by members of the family of

certain partners of Partnership or of former partners.

A-35

Complaint

Partnership, individual partners, Manager, directors and

officers of the Fund and their families, and Oppenheimer as

record owner for its customers between them own in ex-

cess of 98,000 shares of the Fund.

7. During all relevant times the following defendants

held and hold the following officerships and directorships

and interests in the Fund, Manager and Partnership:

The Fund Partnerships Manager

Sidney M. Robbins Director

Eric Hauser Director

Murray Graham Director

Emanuel Celler Director

Joseph M. McDaniel, Jr. Director

Jack Nash Director Partner Vice President

& Secretary

Edmund T. Delaney Director

Leon Levy President Partner Director

& Director

8. At all relevant times the method of operation and the

relationships between the Fund, Partnership and Manager

were as follows: :

(a) Manager acted and acts as manager of the Fund

under an Investment Advisory Agreement with the

Fund under which the Fund’s investment portfolio

was managed by Manager and it furnished at its own

expense investment analysis and statistical and re-

search information and other information to the Fund.

Manager’s compensation for its services as investment

advisor, denominated as a management fee, was two-

fold. It received fixed percentages of % of 1% com-

puted daily on the first $150,000,000 of net asset value

and it received a fee each year if for the prior year it

A-36

Complaint

had bettered the price performance of the Composite

Stoek Price Index for 500 Stocks maintained by Stan-

dard & Poor Corp. If the Fund’s asset growth did not

equal the performance of said index, Manager was

required to make a refund to the Fund.

(b) A Distribution Agreement between Manager and

the Fund granted Manager the right to act as exclu-

sive distributor and sole principal underwriter of the

shares of the Fund, for which Manager received and

retained a substantial portion of the sales commissions.

9. For the purpose of fostering and serving their own

interests at the expense of the Fund, the defendants en-

tered into a common plan and conspiracy, in violation of

the fiduciary obligations to the Fund and its shareholders

imposed on them by virtue of the individual defendants’

positions as directors of the Fund, the relationship between

the Manager and the Fund, and the relationship between

the Partnership and the Fund through the domination and

control of the Manager by the Partnership, by causing the

Fund to commit the following acts of omissions and com-

missions: '

(a) They caused the Fund to purchase securities

whose sale and distribution have been restricted by

the Securities Act (Restricted Securities) and to agree

to purchase said securities subject to the said restrie-

tions. The said securities were purchased at discounts

from the market value of securities of the same com-

panies which were not similarly restricted and which

could be sold and distributed freely by and to the pub-

lic (Free Securities); that the said Restricted Secu-

rities were included in the net asset value of the shares

of the Fund and not at the purchase price, but, in the

A-37

Complaint

case of Free Securities of the same company traded on

a National Exchange, at the last reported sale and as

to over the counter securities at the last quoted bid

price of Free Securities of the same company. Such

values at which the Restricted Securities were carried

did not truly reflect the actual value of the said Re-

stricted Securities in that, under the investment and

speculative climate which then prevailed and still pre-

vails, public knowledge that the Fund had purchased

such securities would tend to drive the market value

of the Free Securities even higher. Further, the value

at which the Restricted Securities were carried in the

assets of the Fund, did not reflect their true value, but

were excessive values since if the Fund was required

to or decided to sell the said Restricted Securities, they

could not be freely liquidated because they could only

be sold to the public after registration under the

Securities Act, the time which might elapse between

the decision to sell said Restricted Securities and the

effective date of such registration might involve a

change of circumstances which would reduce the pro-

ceeds of the sale of said securities, the public knowl-

edge that the Fund had offered said securities for

registration would tend to drive the price down, the

cost of registration and sale of such Restricted Secu-

rities, particularly on the Over-the-Counter market,

would be far in excess of the cost of sale of Free Secu-

rities, and a sale of such Restricted Securities without

registration might be difficult in that purchasers of

large blocks of such securities could not readily be

found.

10. The holding of such Restricted Securities by the

Fund, when combined with a substantial run-up in the

A-38

Complaint

price of the Free Securities of the same companies, there-

fore created a spurious appearance of better price per-

formance for the Fund and a spurious increase in the net

asset value of the Fund as reported to the public and to

its shareholders. This false facade of superior pertor-

mance also increased the rate of sale of Fund Shares to the

public.

11. By reason of the foregoing the defendants were en-

abled to increase the commissions which the Manager

derived from expanded sales, and to increase the basic

management fee and in addition that aspect of the manage-

ment fee which was based on comparative performance with

the Standard & Poor Composite Price Index above alleged.

12. The defendants caused the Fund, in or about March

of 1968 to offer shares for sale to the public by means of

a Prospectus dated March 15, 1968 and thereafter revised

under date of September 3, 1968, (hereafter collectively

described as “Prospectus”) which was disseminated to the

public by the use of the mails and other instrumentalities

in interstate commerce. The aforesaid Prospectus and the

revised version thereof were false and misleading, in that

they omitted or failed to state material facts which were

necessary in order to make statements contained therein,

in the light of the circumstances under which they were

made, not misleading, in that they failed to set forth the

characteristics of and the various considerations in con-

nection with such Restricted Securities, as alleged in par-

agraphs “9” and “10” above.

13. Said acts and omissions, including the issuance of

said Prospectus, constituted violations of Section 10(b) of

A-39

Complaint

the Exchange Act and Rule 10b-5 issued thereunder, and

said acts of omission and commission were performed in

connection with the purchase and sale of shares of the

Fund, and constituted devices, schemes and artifices to

defraud, constituted the making of untrue statements of

material facts or omissions of said material facts necessary

in order to make other statements made, not misleading,

and were also acts, practices and a course of conduct which

tended to and did operate as a fraud upon the Fund, and

its shareholders, including the plaintiff.

14. The aforesaid acts and omissions were also viola-

tions of the fiduciary obligations owed by the defendant

directors to the Fund and its Shareholders, constituted

breaches of their duties of loyalty to the Fund, and were

engaged in recklessly and with wanton disregard of the

interests of the Fund and its Shareholders and to further

the interests of the defendants, Oppenheimer Management

Corporation and Oppenheimer & Company.

15. The aforesaid acts of the defendants other than the

Fund constitute a breach of the investment advisory con-

tract and general distribution contract between the Fund

and Oppenheimer Management Corporation, and all pay-

ments made to the said Oppenheimer Management Corpo-

ration after the occurrence of the said breaches should be

repayable to the Fund.

16. As a result of the foregoing the Fund sustained

damage in the following ways:

(a) The advisory fees were calculated on the in-

flated values of the net assets arising out of the false

and misleading valuations of the Restricted Securities.

A-40

Complaint

(b) When Fund shares were redeemed, the redemp-

tion value of the said Fund shares reflected the in-

flated value of the Restricted Securities and the Fund

paid out more moneys to those shareholders who re-

deemed than it would have paid out otherwise;

the inflated values, the Fund was forced to maintain

a larger cash reserve, since it could not freely sell the

Restricted Securities to create a cash reserve when

needed, and was thereby forced to sell saleable Free

Securities, or, was damaged by reason of the inability

to maintain such large cash reserve to purchase Free

Securities of other corporations and to realize gains

and dividends therefrom.

(d) The foregoing practices constituted a conversion

by the defendants of assets of the Fund in violation

of the Investment Company Act.

(e) The aforesaid practices were publicly exposed

and received wide pubicity in the public press includ-

ing various media to which the investment public and

the financial community had access. The said un-

favorable publicity was damaging to the public image

of the Fund.

(f) As a result of the foregoing, reports sent in by

the Fund to the Securities and Exchange Commission

and required by the Exchange Act, the Securities Act

and the Investment Company Act were false and mis-

leading in that they contained valuations of the Re-

stricted Securities in inflated amounts, which did not

reflect their true value, thereby exposing the Fund to

liability for violation of the said Acts.

441

Complaint

17. The foregoing practices constituted gross negligence,

were in wanton and reckless disregard * the rights of the

Fund and its shareholders, and were engaged in by the

defendants other than the Fund for their own profit and

aggrandizement. and the Manager benefited by the increase

in the amount of the advisory fees, both with respect to

the basic fee and the fee for performance, from the sales

commissions generated by the false appearance of invest-

ment success, and the Partnership, the individual partners

and their relatives, benefited from the increase in the value

of their stock in the Manager. The aforesaid acts were

engaged in for the said purposes and not for purposes

related to the best interests of the Fund and th

shareholders. 9

18. The foregoing practices and breaches of fiduciary

duty alleged above were caused, or permitted, or acquiesced

in by Manager and those individual defendants who were

officers, owners and directors of Manager and of the Fund,

and by the Partnership, all with knowledge or notice of

the facts above alleged and the illegality of the aforesaid

practices and pursuant to a plan among them to benefit

themselves at the expense of the Fund and its shareholders.

19. The Manager, the Partnership and certain of the

individual defendants have made substantial profits by

reason of the foregoing, and the Fund has suffered sub-

stantial damages.

20. In addition thereto the defendants other than the

Fund by reason of the willful, reckless and wanton nature

of their fraud and breach of fiduciary obligations, and their

sacrifice of the interests of the Fund and its shareholders

to their own interests have made themselves liable to ac-

Complaint

count to the Fund for their own profits, and for the dam-

ages sustained to the Fund.

21. No demand has been made by the plaintiff upon the

Fund to institute and prosecute this action against the

defendants named herein, because Manager and its and

the Fund directors are named as defendants herein, and

they have participated in, acquiesced in or have profited

from, and are personally liable for the wrongs complained

of in this action; and any demand upon them to institute

such an action would have been futile and useless in that

thereby said defendants would have been required to in-

stitute an action against themselves and any action so

instituted by them would be friendly to the defendants

and hostile to the interests of Fund and its shareholders.

22. No demand has been made upon the shareholders

of the Fund to institute and prosecute this action against

the defendants named herein, because the wrongs alleged

are in violation of Federal statute, are illegal, and are

not subject to ratification by the shareholders of Fund;

and under New York law the directors of the Fund and not

the shareholders, are vested with the management of Fund

including the institution of all actions in behalf of Fund;

and a resolution by the shareholders of Fund directing the

institution of this action would be futile and useless because

the prosecution of the action would be placed in the control

of Manager and its directors. Furthermore, there are

many thousands of public shareholders of the Fund scat-

tered throughout the United States and abroad and it would

be impracticable to bring them all before the court and the

solicitation of proxies from such a large and scattered

number of shareholders would place an unreasonable bur-

den and expense on the plaintiff, and extended delays

A43

Complaint

would result which would be harmful and seriously prej-

udicial to the prosecution of this action, and might result

in the application of statutes of limitations to bar this

action.

23. Plaintiff has no adequate remedy at law.

24. — will fairly insure the adequate representa-

on of the similarly situated sharehold

* ers of the Fund and

Covurr II

25. The plaintiff repeats and realleges, each and every

allegation contained in paragraphs 1 and 3 to 20 inelusive

= the same force and effect as though fully set forth

erein.

26. Plaintiff brings this cause of action on a representa-

tive basis on his own behalf and on behalf of all other

persons similarly situated who purchased Fund shares

since March 15, 1968. The said persons constitute a class

which is so numerous that joinder of all of its members

would be impracticable. Questions of law and fact exist

common to the class and the claims of this plaintiff are

typical of the claims of the class and he will fairly and

adequately represent and protect the interests of the ‘class,

27. The Prospectus described in i

2 paragraph “11” in ad-

dition to the misleading statements and omissions alleged

therein omitted to state that the Fund intended to or had

invested in Restricted Securities, and did not adequately or

clearly set forth that the risks of investment in such Re-

stricted Securities were greater than those involved in

investments in Free Securities.

A44

Complaint

28. The plaintiff, on or about December 24, 1968, pur-

chased 2,302.026 shares of the Fund at $10.86 per share.

29. In making the aforesaid purchase the defendant re-

lied on the said Prospectus,

30. The members of the class whom plaintiff herein

represents, also purchased shares of the Fund relying upon

the said Prospectus.

31. The defendants other than the Fund, when they

caused the said Prospectus to be issued, intended that the

public, including the plaintiff, would rely on the informa-

tion set forth therein and intended that members of the

public including the plaintiff would purchase such shares

in reliance thereon.

32. The plaintiff and the said members of the class were

damaged by reason of the premises, in that the prices paid

by them for their shares of the Fund, were inflated and in

excess of the true value thereof and did not truly reflect

the net asset value of the shares of the Fund at which such

purchases were required to be made.

33. The plaintiffs and all other persons similarly sit-

uated have sustained substantial damages and the defen-

dants other than the Fund are liable to them therefor, and

are also liable to the plaintiffs and the class for punitive

damages.

Wuenerorz, the plaintiff demands judgment as follows:

(a) Requiring all defendants other than the Fund

to account jointly and severally to the Fund, for all

damages sustained by the Fund, and for all profits

2 A-45

Complaint

made by them as a result of the acts and transactions

complained of in Count I herein;

(b) Declaring the investment advisory agreement

and the distribution contract and any extensions or

modifications of said agreement between Oppenheimer

Management Corporation and the Fund to be null and

void; and directing defendants other than the Fund to

account to the Fund for all fees received thereunder;

Count II hereof is a class action under the provisions

of Rule 23 of the Federal Rules of Civil Procedure;

(d) Declaring that all of the defendants are jointly

and severally liable for all damages which plaintiff and

all other persons similarly situated have been caused

by virtue of the acts and transactions complained of in

Account [sic] II hereof, together with punitive dam-

ages ;

(e) Awarding to the plaintiff the costs and disburse-

ments of this action including reasonable attorneys’

fees and accountants’ fees;

(f) Granting such other and further relief as to this

Court may seem just and proper.

Lersow!rr, MILBERG, Weiss & Fox

By /s/ Lawrence Mrserc

Member of the Firm

Attorneys for Plaintiff

Office & P. O. Address

2 Pennsylvania Plaza

New York, N. Y. 10001

A-46

Complaint

Strate or New York,

County or New YORK, 88.:

Econ Tavussic, being duly sworn, deposes and says that

deponent is the plaintiff in the within action; that deponent

has read the foregoing complaint and knows the contents

thereof; that the same is true to deponent’s own knowledge,

except as to the matters therein stated to be alleged on

information and belief, and that as to those matters de-

ponent believes it to be true.

/s/ Econ Tavussie

Egon Taussig

[Sworn to May 7, 1969]

A-47

Complaint

No. 69 Civ. 2642

UNITED STATES DISTRICT COURT

SoutHern District or New York

MiogARL SHARV and Rrra SHaev,

Plaintiffs,

—against—

Eric Hauser, EMAN URL CRLLAR, Epmunp T. Detanzy, Leon

Levy, Jack Nasu, JosepH M. McDaniet, In., Smnzy M.

Rossins, OPPENHEIMER MANAGEMENT CorPoRATION, Or-

PENHEIMER & Company and OppenHEIMER Funp, Inc.,

Defendants.

Plaintiffs Demand Trial by Jury

Plaintiffs, by their undersigned attorney, for their com-

plaint, allege upon information and belief, except para-

graph “14” hereof, which is alleged upon knowledge:

1. (a) Jurisdiction herein is based upon Section 22 of

the Securities Act of 1933, (“1933 Act”), Section 27 of the

Securities Exchange Act of 1934 (“1934 Act”) and Section

44 of the Investment Company Act of 1940 (“1940 Act”).

(b) The action arises under Sections 12(2) and 17 of

the 1933 Act, Section 10(b) of the 1934 Act and Rule 10b-5

of the Rules under the 1934 Act, Sections 22, 30 and 37 of

the 1940 Act and the Rules thereunder.

Court jurisdiction it would not otherwise have.

A-48

Complaint

2. (a) Defendant Oppenheimer Fund, Inc. (the Fund“)

is a corporation duly organized and existing under the laws

of New York.

(b) The Fund is registered under the 1940 Act as an

open-end diversified investment company.

to the public at a price which is alleged to represent the net

asset value thereof to which is added a sales charge.

(d) On December 31, 1968, 26,741,767 shares of the Fund

were issued and outstanding, of which in excess of 5,000,000

shares have been issued since March 15, 1968.

3. (a) Oppenheimer Management Corporation (the

„Manager“) is a corporation duly organized and existing

under the laws of New York.

(b) The Manager has acted and continues to act as the

Investment Adviser to the Fund and the supervisor of its

portfolio pursuant to a written contract which provides for

compensation to the Manager payable monthly based upon

a percentage of net assets and in addition annually upon

performance of the Fund as compared with the Standard &

Poor’s Composite Stock Price Index of 500 stocks (the

“Index”). Such performance fee is added to the basic fee

if the Fund outperforms the Index and the basic fee is re-

duced in the event the Index outperforms the Fund.

(e) The Manager has acted and continues to act as un-

derwriter of the Fund’s shares receiving as commissions a

sales charge at a rate not in excess of 812% of the offering

price. The Manager also acts as Sponsor and General Dis-

tributor for the Oppenheimer Systematic Capital Accumu-

lation Program.

A-49

Complaint

4. (a) Defendant Oppenheimer & Co. (the “Broker’’) is

a New York partnership and is a member of the New York

Stock Exchange.

(b) The Broker owns 11,000 shares of the voting stock of

the Manager which constitutes approximately 82% of the

outstanding stock of the Manager. The non voting stock of

the Manager is owned principally by the members of the

families or partners or former partners of the Broker.

(e) The Broker owns approximately 33,000 shares of the

Fund’s stock and is the largest holder of shares of the

Fund. Together with the Manager, the officers and direc-

tors of the Fund, the partners of the Broker and the mem-

bers of their families, they own in excess of 80,000 shares

of the Fund’s shares. In addition, the Broker is the record

owner of approximately 13,000 shares owned by its cus-

tomers.

(d) The Broker acts as principal broker for the Fund in

the purchase and sale of the Fund’s portfolio securities,

5. (a) The individual defendants are all of the directors

of the Fund.

(b) Defendant Leon Levy is President of the Fund and

is a partner of the Broker and President and a Director of

the Manager.

(e) Defendant Edmund T. Delaney is a member of the

law firm which is counsel for the Fund.

(d) Defendant Jack Nash is a partner of the Broker and

is a Vice President and Assistant Secretary of the Man-

ager.

(e) All the officers of the Fund are either partners or

employees of the Broker or officers or employees of the

Manager.

A-50

Complaint

6. Commencing with March 15, 1968 and continuing to

the present, the defendants other than the Fund in connec-

tion with the sale and purchase of shares of the Fund and

by the use of the mails and instrumentalities of interstate

commerce, have directly and indirectly employed devices,

schemes and artifices to defraud; have made untrue state-

ments of material facts, or have omitted to state material

facts in order to make the statements made, in the light of

the circumstances under which they were made, not mis-

leading; and, have engaged in acts, practices and a course

of conduct which was intended to and did operate as a

fraud upon the plaintiff and other similarly situated per-

sons, in violation of Sections 12(2) and 17 of the 1933 Act,

Section 10(b) of the 1934 Act and Rule 10b-5 of the Rules

promulgated under the 1934 Act and Sections 22, 30 and 37

of the 1940 Act.

7. The violations hereinbefore referred to in paragraph

“6” hereof were caused by the defendants, other than the

Fund, by causing the Fund to issue a prospectus for the

sale of the Fund's shares, dated March 15, 1968 and a re-

vised prospectus dated September 3, 1968.

8. The aforesaid prospectus and revised prospectus were

false and misleading in the following respects:

(a) They failed to disclose that the Fund would invest

in restricted securities known as “investment letter se-

curities.”

(b) They failed to disclose that restricted securities

purchased by the Fund could not be resold without reg-

istration under the 1933 Act.

(e) They failed to disclose that such securities could

not be registered under the 1933 Act for a considerable

period of time.

A-51

Complaint

(d) They failed to disclose that a considerable period

of time could elapse betwen such registration and any

sale thereunder.

(e) They failed to disclose that the sale of restricted

securities would require an underwriter and that the

fees and commissions paid an -underwriter would re-

duce the net sales to the Fund to a price lower than the

market price for unrestricted stock.

(f) Restricted securities involve greater risk than un-

restricted securities.

9. Subsequent to March 15, 1968 the Fund was, caused by

the defendants, to purchase the following restricted securi-

ties, among others:

50,000 shares of Unexcelled, Inc.

28,000 shares of Trans-lux Corp.

5,000 warrants of Saxon Paper Corp.

$2,000,000 of Saxon Industries Senior Subordinated

Convertible Notes.

$2,000,000 of U.S. Financial Convertible Subordinated

Notes.

496,000 warrants of Gulf & Western Industries.

47,000 shares of Downe Communications, Inc.

10. In furtherance of the violations referred to in para-

graph “6” hereof and pursuant to a common scheme and

plan the defendants caused the assets of the Fund and spe-

cifically the restricted securities of the Fund to be over-

valued on the books of the Fund.

11. In furtherance of the aforesaid violations and in pur-

suance of the aforementioned common scheme and plan the

A-52

Complaint

Fund was caused to issue interim and annual reports which

were false and misleading in containing overvaluations of

such restricted securities.

12. In furtherance of said violations and in pursuance of

the aforesaid common scheme and plan, the Fund was

caused to pay excessive fees to the Manager based upon

such overvalued restricted securities and constituted a con-

version of assets of the Fund in violation of Section 37 of

the 1940 Act.

13. In reliance upon the prospectus dated March 15, 1968

and the revised prospectus dated September 3, 1968 and

financial reports issued by the Fund, the plaintiffs and

other persons similarly situated purchased the Fund’s

shares.

14. The plaintiffs purchased 22.599 shares of the Fund

on April 24, 1968 and 19.512 shares on October 1, 1968.

15. Plaintiffs bring this action on their own behalf and

representatively on behalf of all other persons who pur-

chased shares of the Fund subsequent to March 15, 1968.

16. (a) The persons similarly situated with the plaintiffs

constitute a class so numerous that joinder of all members

is impractical ;

(b) There are questions of law or of fact common to the

class ;

of the class;

(d) The plaintiffs will fairly and adequately protect the

interests of the class.

A-53

Complaint

17. By reason of the foregoing the plaintiffs and the

other members of the class have sustained damages in the

aggregate exceeding $1,000,000.

18. Plaintiffs have no adequate remedy at law.

Count TWO

19. Plaintiffs repeat paragraphs “1” through “14” and

“18” hereof.

20. (a) Plaintiffs bring this Count derivatively in the

right of and for the benefit of the Fund.

(b) Plaintiffs have been stockholders of the Fund since

April 24, 1968 and have been stockholders at the time of

the transactions of which they complain.

21. This action is not a collusive one to give this Court

jurisdiction it would not otherwse have.

22. Defendants the Manager, the Broker, Levy, Nash and

Delaney fraudulently failed to disclose to the other direc-

tors of the Fund, the true value of the restricted securities

purchased by the Fund as hereinbefore set forth.

23. As a result of the foregoing fraudulent acts of the

said defendants, the Fund has been caused to redeem its

shares at excessive values, which values reflected the false

and overvalued restricted securities heretofore referred to.

24. As a result of the fraudulent acts of the said defen-

dants, the Fund has sustained damages in excess of

$1,000,000.

A-54

Complaint

25. The acts of the defendants constituted violations of

the 1933 Act, the 1934 Act and the Rules thereunder and

the 1940 Act and constituted a violation of their fiduciary

duties to the Fund.

26. As a result of their acts, the Manager, Broker and a

number of the individual defendants have made large prof-

its and caused substantial damage to the Fund, the exact

amount of such profits and damage being presently un-

known to plaintiffs.

27. As a result of the illegal and fraudulent acts of the

defendants, the investment advisory contract and the dis-

tribution agreement between the Fund and the Manager are

illegal and void under Section 47(b) of the 1940 Act.

28. Plaintiffs have made no demand upon the Fund or the

directors of the Fund to bring this action because such de-

mand would be futile because all of the directors partici-

pated in, approved of or acquiesced in the acts and trans-

actions complained of herein. The directors have long

known of the acts hereinbefore complained of but have

taken no action with respect thereto. The directors are

themselves defendants in the action and any action brought

by the Fund would have to be brought against them and

any such action could not and would not be diligently

prosecuted.

Waenrerore, plaintiffs demand judgment as follows:

A. Finding the defendants other than the Fund

jointly and severally liable for all damages which

plaintiffs and other persons similarly situated have

sustained as a result of defendants illegal conduct com-

plained of in Count One herein;

A-55

Complaint

B. Finding the defendants other than the Fund,

jointly and severally liable to the Fund for damages

sustained by it as a result of the acts complained of in

Count Two;

C. Requiring the defendants, other than the Fund

to account to the Fund for all their profits as a result

of the acts complained of in Count Two herein;

D. Declaring the investment advisory and the under-

writing agreements between the Manager and the

Fund null and void;

E. Awarding plaintiffs the costs and disbursements

of this action, including a reasonable allowance of

counsel fees to their attorney; and

F. Granting plaintiffs such other and further relief

as to this Court may seem just and proper.

S Apranam I. Marxowrrz

Aspanam I. Marxowrrz

Attorney for Plaintiffs

Office & P.O. Address

276 Fifth Avenue

New York, N. T. 10001

Mu 44771

A-56

Complaint

Strate or New York,

County or New York, ss.:

Micki, Snakv, being duly sworn, deposes and says that

he is one of the plaintiffs in the within action; that he has

read the foregoing complaint and knows the contents there-

of; that the same is true to his own knowledge, except as

to the matters therein stated to be alleged upon informa-

tion and belief and that as to those matters he believes it

to be true.

/s/ Micwari SHarv

MioRAEL SHarv

[Sworn to June 9, 1969]

A-57

Amended Answer of Defendants

Oppenheimer Management Corp., et al.

No. 69 Civ. 1242“

UNITED STATES DISTRICT COURT

Sour RN Districr or New Tonk

Invine SaNDERs,

Plaintiff,

—against—

Leon Levy, Jack Nasu, Epmenp T. Detaney, Emanven

Crier, Exic Hauser, Josepx M. MDax NI. In., Smxey

M. Rossrxs, OpreNHEIMER MANAGEMENT CorPoraTION,

OppeNnHEIMER & Company, and OppeNHEIMER Fyn, Ixc.,

Defendants.

The defendants, Oppenheimer Management Corporation,

Oppenheimer & Company, Leon Levy and Jack Nash by

Guggenheimer & Untermyer, their attorneys, for their

amended answer to the complaint herein:

1, Admit the averments of paragraph | of the complaint.

2. Deny each and every averment contained in para-

graphs 2 and 24 of the complaint, except admit that the

action purports to be brought representatively on behalf

of those of the shareholders of Oppenheimer Fund, Inc.

»The amended answers of these defendants to the complaints

filed in 69 Civ. 2029 and 69 Civ. 2642 have not been included in

the appendix herein. Relevant to these proceedings, the amended

answer of these defendants to each of the respective complaints

does not differ in any substantial way.

A-58

Amended Answer of Defendants

Oppenheimer Management Corp., et al.

(herein called the Fund“) who purchased shares of the

Fund subsequent to March 15, 1968 and derivatively on

behalf of the Fund.

3. Deny each and every averment contained in para-

graph 3 of the complaint, except admit that the jurisdiction

of this Court purports to be based upon Section 27 of the

Securities Exchange Act, 15 U.S.C. §78(aa), Section 44 of

the Investment Company Act, 15 U.S.C. §80a-43, Sections

1331 and 1337 of the Judicial Code, 28 U.S.C. §§1331 and

1337, and the doctrine of pendent jurisdiction.

4. Admit the averments of paragraph 4 of the complaint,

except deny that the public offering price of shares is other

than the net asset value of said shares plus a stated sales

charge.

5. Admit the averments of paragraphs 5, 6, 7, 9, 10, 11,

25 and 26 of the complaint, except aver that defendant

Jack Nash is an assistant secretary of Oppenheimer Man-

agement Corporation, not the secretary as averred in para-

graph 10 of the complaint.

6. Admit the averments contained in paragraph 8 oi

the complaint, except that the shareholdings therein re-

ferred to were true only as of December 31, 1967.

7. Deny each and every averment contained in para-

graph 12 of the complaint, except admit that the Fund filed

a prospectus with the Securities and Exchange Commission

for the sale of shares of the Fund which became effective

on March 14, 1968, thereafter said prospectus was revised

effective September 3, 1968, and that shares of the Fund

A-59

Amended Answer of Defendants

Oppenheimer Management Corp., et al.

have been sold since March 15, 1968 by use of the mails and

other instrumentalities in interstate commerce.

8. Deny each and every averment of paragraph 13 of

the complaint, except admit that said prospectus and re-

vised prospectus did not state the matters referred to in

subdivision B of said paragraph.

9. Deny each and every averment contained in para-

graph 14 of the complaint, except admit that subsequent

to March 15, 1968 the Fund purchased the restricted secu-

rities therein referred to.

10. Deny each and every averment contained in para-

graphs 15, 16, 17, 18, 19, 20, 21 2, 23, 27, 28, 29, 30, 31

and 32 of the complaint.

11. Deny each and every averment contained in para-

graph 33 of the complaint except admit that the Board of

Directors of the Fund would not bring this action.

First AFFIRMATIVE DEFENSE

12. The Fund is an open-end diversified investment com-

pany of the management type, organized under the laws

of the State of New York. The Fund’s shares are regis-

tered under the Securities Act of 1933, 15 U.S.C. 77a

et seq. The Fund is registered under the Investment Com-

pany Act of 1940, 15 U.S.C. §§80a-1 et seq., and it conducts

its business in compliance with said Acts and with the

rules and regulations issued by the Securities and Ex-

change Commission thereunder.

13. The shares of the Fund are offered for sale to the

public pursuant to registration statements which have duly

A-60

Amended Answer of Defendants

Oppenheimer Management Corp., et al.

become effective under the Securities Act of 1933, which

registration statements include detailed prospectuses which

are issued at least annually by the Fund. Each year the

Fund delivers to its shareholders a proxy statement in con-

nection with the annual meeting of shareholders at which

the shareholders vote for, among other things, the election

of directors and approval of, among other things, the In-

vestment Advisory Agreement between the Fund and

Oppenheimer Management Corporation (hereinafter re-

ferred to as Management Corporation“).

14. All prospectuses and proxy statements of the Fund

are submitted for examination and review to the Securi-

ties and Exchange Commission prior to release and dis-

tribution to prospective purchasers and holders of shares

of the Fund.

15. Said prospectuses and proxy statements have at all

times disclosed fully and fairly the terms of agreements

between the Fund and Management Corporation, including

the compensation paid by the Fund to Management Corpo-

ration for advisory and management services and the

compensation paid to Oppenheimer & Co. for services, in-

cluding underwriting and brokerage services. Such pro-

spectuses and proxy statements disclose fully and fairly

all material relationships among the Fund, its officers and

directors, Management Corporation and Oppenheimer &

Co.

16. The Fund regularly publishes and distributes to its

shareholders annual, semi-annual and quarterly reports,

which clearly and accurately set forth all payments made

A-61

Amended Answer of Defendants

Oppenheimer Management Corp., et al.

by the Fund to Management Corporation and to Oppen-

heimer & Co.

17. Upon information and belief, at or prior to the time

plaintiff became a shareholder of the Fund he received a

copy of the then current prospectus of the Fund, and since

he became a shareholder he has received copies of all

annual, semi-annual and quarterly reports of the Fund.

18. The Fund’s semi-annual report to its shareholders

for the period ending June 30, 1968, the quarterly report

for September 30, 1968, the report for year ended December

31, 1968 and subsequent reports all set forth that the Fund

had acquired securities under investment letters with re-

strictions on transfer or resale and that the valuation

thereof had been determined by the Board of Directors of

the Fund.

19. At no time during the period referred to in the com-

plaint did the value of investment letter securities of the

Fund exceed 10% of the value of all of the securities of the

Fund.

20. To the extent that the value of the Fund’s invest-

ments in investment letter securities may be deemed mate-

rial, there was fair, adequate and timely disclosure thereof

to the shareholders of the Fund.

Seconp AFFIRMATIVE DEFENSE

21. Defendants repeat and reallege each of the allega-

tions contained in paragraphs 12 through 20, inclusive, of

this answer as though fully set forth at length herein.

A-62

Amended Answer of Defendants

Oppenheimer Management Corp., et al.

22. Upon information and belief, at no time prior to

the institution of this action did the plaintiff express to

the defendants disapproval of the matters of which he

now complains in the complaint herein.

23. Upon information and belief, the plaintiff and share-

holders of the Fund have acquiesced in and approved the

matters and transactions alleged in the complaint, received

the benefits of the securities acquired by the Fund, and

they have, therefore, waived the claims, if any, with respect

thereto and are barred from complaining of said matters

and transactions.

Turmp AFFIRMATIVE DEFENSE

24. Defendants repeat and reallege each of the allega-

tions contained in paragraphs 12 through 23, inclusive, of

this answer with the same force and effect as though set

forth at length herein.

25. The prospectus of the Fund, as supplemented on

September 3, 1968, set forth the extent of the Fund’s in-

vestments in investment letter securities and stated that

the Fund would not make any investment which would

cause more than 15% of the value of its assets to be

invested in securities which are subject to legal or con-

tractual restrictions on resale or are otherwise not readily

saleable.

26. Shareholders of the Fund, including plaintiff, who

purchased Fund shares subsequent to receipt of the Fund’s

semi-annual report for the period ending June 30, 1968 or

of the Fund’s prospectus as supplemented on September

3, 1968 had due notice that the Fund had acquired and

A-63

Amended Answer of Defendants

Oppenheimer Management Corp., et al.

might continue to acquire investment letter securities, and

they are therefore estopped to assert any claims with re-

spect to such securities acquired after such dates.

Fourta AFFIRMATIVE DEFENSE

27. Defendants repeat and reallege each of the allega-

tions contained in paragraphs 12 through 26, inclusive, of

this answer with the same force and effect as though set

forth at length herein.

28. Upon information and belief, the plaintiff does not

fairly and adequately represent the interests of the share-

holders of the Fund for, among other things, the following

reasons:

(a) The great majority of shareholders approved

the purchases of the restricted securities referred to

in the complaint and the valuation thereof by the

Board of Directors of the Fund;

(b) The plaintiff’s claims herein involve a conflict

of interest in that he seeks to recover for himself and

others damages for alleged overpayments which he

and others made to the Fund while at the same time

he seeks to sue derivatively on behalf of the Fund to

recover alleged overpayments made by the Fund to

others.

29. Upon information and belief, plaintiff may not main-

tain this action derivatively on behalf of the Fund or

representatively on behalf of the shareholders of the Fund.

A-64

Amended Answer of Defendants

Oppenheimer Management Corp., et al.

Frets AFFIRMATIVE DEFENSE

30. Defendants repeat and reallege each and every al-

legation contained in paragraphs 10 through 29, inclusive,

of this answer with the same force and effect as if set forth

at length herein.

31. Section 2(a)(39) of the Investment Company Act of

1940, 15 U.S.C. Section 80a-2(a)(39), provides in relevant

part that with respect to assets of registered investment

companies the value of the securities for which market

quotations are readily available shall be the market value

of such securities and the value of other securities and as-

sets shall be the fair value as determined in good faith by

the board of directors of the investment company. Rule

2a-4 of the General Rules and Regulations issued by the

Securities and Exchange Commission under the Investment

Company Act of 1940 provides in relevant part that in

computing the price of Fund shares for the purpose of dis-

tribution, redemption and repurchase, portfolio securities

for which market quotations are readily available shall be

valued at current market value and other securities shall

be valued at fair value as determined in good faith by the

board of the directors of the Fund.

32. At all times while the transferability of the secu-

rities referred to in the complaint herein was restricted,

the value of each such security for the purposes referred

to in the complaint was determined in good faith by the

Board of Directors of the Fund, and such value was in

each case the fair value thereof, in accordance with the

requirements of the aforesaid statute and Rule.

A-65

Amended Answer of Defendants

Oppenheimer Management Corp., et al.

SixTH AFFIRMATIVE DEFENSE

33. Defendants repeat and reallege each and every al-

legation contained in paragraphs 10 through 32, inclusive,

of this answer with the same force and effect as if set forth

at length herein. |

34. Each of the claims set forth in the complaint is

barred by laches.

SEVENTH AFFIRMATIVE DEFENSE

35. Defendants repeat and reallege each of the allega-

tions contained in paragraphs 12 through 20 and 30 through

32, inclusive, of their answer with the same force and effect

as if set forth at length herein.

36. In Count One of the complaint herein, plaintiff al-

leges, among other things, that he brings this action on his

own behalf and representatively on behalf of all other

persons similarly situated who purchased shares of Op-

penheimer Fund, Inc. (the Fund“) subsequent to March

15, 1968 (hereinafter referred to as the “Purchasing

Class”), and plaintiff seeks to recover for himself and

members of the Purchasing Class excessive amounts

claimed to have heen paid on the purchase of said shares

by reason of alleged overvaluation of restricted securities

in the portfolio of the Fund.

37. In Count Two of the complaint herein, plaintiff al-

leges, among other things, that he brings this action

derivatively on behalf of the Fund to recover from defen-

dants excessive amounts claimed to have been paid by the

Fund when the Fund was required to redeem shares of

A-66

Amended Answer of Defendants

Oppenheimer Management Corp., et al.

the Fund and that such excessive amounts were paid by

reason of alleged over-valuation of restricted securities in

the portfolio of the Fund.

38. Upon information and belief, since March 15, 1968

plaintiff and/or members of the Purchasing Class have

caused the Fund from time to time to redeem some or all

of their Fund shares.

39. At all relevant times, the method of valuing Fund

shares for purposes of redemption was the same as the

method of valuing Fund shares for purposes of sale, and if

restricted securities were overvalued in connection with

sale of Fund Shares as alleged by plaintiff, they were

similarly overvalned in connection with redemption of

Fund shares.

40. If the defendants are liable to plaintiff and members

of the Purchasing Class in connection with the purchase

of Fund shares by reason of overvaluation of restricted

securities in the portfolio of the Fund, then plaintiff and

members of the Purchasing Class who have redeemed Fund

shares since March 15, 1968 have received excessive

amounts by reason of such alleged overvaluation of re-

stricted securities and are liable to the defendants to the

extent thereof.

41. By reason of the foregoing, plaintiff and members

of the Purchasing Class are or may be liable to defendants,

wholly or in part, for the claims alleged in the complaint

herein.

A-67

Amended Answer of Defendants

Oppenheimer Management Corp., et al.

E1e¢HTH# AFFIRMATIVE DEFENSE

42. Defendants repeat and reallege each of the allega-

tions contained in paragraphs 35 through 40, inclusive, of

their answer with the same force and effect as if set forth

at length herein.

43. After deduction of the sales charge, the price for

Fund shares purchased by plaintiff and members of the

Purchasing Class was paid to and received and retained

by the Fund.

44. If the defendants are liable to plaintiff and members

of the Purchasing Class or to the Fund by reason of over-

valuation of restricted securities in the portfolio of the

Fund in connection with the sale or redemption, or both,

of Fund shares, then the Fund is liable to the defendants

to the extent that the Fund has received funds from plain-

tiff and members of the Purchasing Class by reason of such

overvaluation.

45. By reason of the foregoing, the Fund is or may be

liable to the defendants, wholly or in part, for the claims

alleged in the complaint herein.

Wuererore, the defendants Oppenheimer Management

Corporation, Oppenheimer & Co., Leon Levy and Jack

Nash demand judgment as follows:

1. Dismissing the complaint herein, together with the

costs and disbursements of this action;

2. If said defendants are liable to plaintiff or others

(including but not limited to all persons similarly situated

A-68

Amended Answer of Defendants

Oppenheimer Management Corp., et al.

on whose behalf plaintiff acts as representative and defen-

dant Oppenheimer Fund, Inc.) by reason of overvaluation

of restricted securities in the portfolio of said Fund, hold-

ing the plaintiff and all such others jointly and severally

liable to said defendants for all amounts received by them

or to which they are entitled to the extent that such amounts

were based upon overvaluation of restricted securities in

the portfolio of said Fund and setting off such amounts

against any amounts for which said defendants may be

liable to the plaintiff and all such others; and

3. Such other, further and different relief as may be just.

GuccENHEIMER & UNTERMYER

By /s/ Leon H. TYkvULskKer

A Member of the Firm

Attorneys for Defendants

Oppenheimer Management Corporation,

Oppenheimer d Co., Leon Levy and

Jack Nash

Office and Post Office Address

80 Pine Street

New York, N. Y. 10005

Telephone: (212) 344-2040

A-69

Amended Answer of Defendant

Oppenheimer Fund, Inc.

No. 69 Civ. 1242°

UNITED STATES DISTRICT COURT

SovtHern Disraict or New Yorx

Invine SanpDeERs,

Plaintiff,

—against—

Leon Levy, Jack Nase, Epmcnp T. Detayey, Emayver

Ceuier, ERIC Havses, Josepx M. McDanrez, Ja., Smxey

M. Rossrss, OppeNnermern MANAGEMENT Corporation,

OprenHEIMER & Company, and OppenHermen Frxr, Ixc.,

Defendants.

—

Now comes Oppenheimer Fund, Inc. (Fund) by its at-

torneys, Weisman, Celler, Spett, Modlin & Wertheimer, and

paragraph by paragraph answers the complaint herein:

1. Admits the allegations of paragraph 1.

2. Denies each and every allegation in paragraph 2, ex-

cept that it admits that the action puports to be brought

representatively on behalf of those of the shareholders of

the Fund who purchased shares of the Fund subsequent to

March 15, 1968.

A-70

Amended Answer of Defendant Oppenheimer Fund, Inc.

3. Denies each and every allegation in paragraph 3 of

the complaint, except that it admits that the jurisdiction of

the Court purports to be based on Section 27 of the Securi-

ties Exchange Act, 15 U.S.C. §78(aa), Section 44 of the

Investment Company Act, 15 U.S.C. § 80a-43, Sections 1331

and 1337 of the Judicial Code, 28 U.S.C. 58 1331 and 1337,

and the doctrine of pendent jurisdiction.

4. Admits the allegations of paragraph 4 of the com-

plaint, except that it denies that the public offering price of

shares is other than the net asset value of the shares plus

a stated sales charge.

5. Admits the allegation of paragraph 5 of the complaint.

6. Admits the allegations of paragraph 6 of the com-

plaint.

7. Admits the allegations of paragraph 7 of the com-

plaint.

8. Admits the allegations contained in paragraph 8 of

the complaint, except that the shareholdings therein re-

ferred to were true only as of December 31, 1967.

9. Admits the allegation of paragraph 9 of the com-

plaint.

10. Admits the allegations of paragraph 10 of the com-

plaint, except that it avers that the defendant Jack Nash

is an assistant secretary of Oppenheimer Management Cor-

poration (Management Corporation), not the secretary.

11. Admits the allegations of paragraph 11 of the com-

plaint.

A-71

Amended Answer of Defendant Oppenheimer Fund, Inc.

12. Denies each and every allegation contained in para-

graph 12 of the complaint, except that it admits that the

Fund filed a prospectus with the Securities and Exchange

Commission for the sale of shares of the Fund which be-

came effective on March 14, 1968, that thereafter said pro-

spectus was revised effective September 3, 1968, and that

shares of the Fund have been sold since March 15, 1968 by

use of the mails and other instrumentalities in interstate

commerce.

13. Denies each and every allegation of paragraph 13 of

the complaint, and avers on the contrary that the prospec-

tus of the Fund, as supplemented on September 3, 1968,

stated that the Fund would not make any investment which

would cause more than 15% of the value of its assets to be

invested in securities which are subject to legal or contrac-

tual restrictions on resale or are otherwise not readily sale-

able; but admits that the text in subdivisions A and B were

not set forth “in haec verba” in the prospectus.

14. Denies each and every allegation contained in para-

graph 14 of the complaint, except that it admits that sub-

sequent to March 15, 1968 the Fund purchased the re-

stricted securities therein referred to.

15. Denies each and every allegation contained in para-

graph 15 of the complaint.

16. Denies each and every allegation contained in para-

graph 16 of the complaint.

17. Denies each and every allegation contained in para-

graph 17 of the complaint.

A-72

Amended Answer of Defendant Oppenheimer Fund, Inc.

18. Denies each and every allegation contained in para-

graph 18 of the complaint.

19. Denies each and every allegation contained in para-

graph 19 of the complaint.

20. Denies each and every allegation contained in para-

graph 20 of the complaint.

21. Denies each and every allegation contained in para-

graph 21 of the complaint.

22. Denies each and every allegation contained in para-

graph 22 of the complaint.

23. Denies each and every allegation contained in para-

graph 23 of the complaint.

24. Denies the allegation of paragraph 24 of the com-

plaint, except that it admits that the action purports to be

brought derivatively on behalf of the Fund.

25. Admits the allegations of paragraph 25 of the com-

plaint.

26. Without making any admission as to the jurisdiction

of this Court, the Fund admits that this action is not

brought collusively.

27. Denies each and every allegation of paragraph 27 of

the complaint.

28. Denies each and every allegation of paragraph 28 of

the complaint.

A-73

Amended Answer of Defendant Oppenheimer Fund, Inc.

29. Denies each and every allegation of paragraph 29 of

the complaint.

30. Denies each and every allegation of paragraph 30 of

the complaint.

31. Denies each and every allegation of paragraph 31 of

the complaint.

32. Denies each and every allegation of paragraph 32 of

the complaint.

33. Denies each and every allegation contained in para-

graph 33 of the complaint, except that it admits that the

Board of Directors of the Fund would not bring this action.

First AFFIRMATIVE DEFENSE

34. The Fund is an open-end diversified investment com-

pany of the management type, organized under the laws of

the State of New York. The Fund’s shares are registered

under the Securities Act of 1933, 15 U.S.C. §¢ 77a et seq.

The Fund is registered under the Investment Company Act

of 1940, 15 U.S.C. §§ 80a-1 et seq., and it conducts its busi-

ness in compliance with said Acts and with the rules and

regulations issued by the Securities and Exchange Com-

mission thereunder.

35. The shares of the Fund are offered for sale to the

public pursuant to registration statements which have duly

become effective under the Securities Act of 1933, which

registration statements include detailed prospectuses which

are issued at least annually by the Fund. Each year the

Fund delivers to its shareholders a proxy statement in

connection with the annual meeting of shareholders at

A-74

Amended Answer of Defendant Oppenheimer Fund, Inc.

which the shareholders vote for, among other things, the

election of directors and approval of, among other things,

the Investment Advisory Agreement between the Fund and

Management Corporation.

36. All prospectuses and proxy statements of the Fund

are submitted for examination and review to the Securities

and Exchange Commission prior to release and distribution

to prospective purchasers and holders of shares of the

Fund.

37. Said prospectuses and proxy statements have at all

times disclosed fully and fairly the terms of agreements be-

tween the Fund and Management Corporation, including

the compensation paid by the Fund to Management Cor-

poration for advisory and management services and the

compensation paid to Oppenheimer & Co. for services, in-

cluding underwriting and brokerage services. Such pros-

pectuses and proxy statements disclose fully and fairly all

material relationships among the Fund, its officers and

directors, Management Corporation and Oppenheimer &

Co.

38. The prospectus of the Fund, as supplemented on

September 3, 1968, set forth the extent of the Fund’s in-

vestments in investment letter securities and stated that

the Fund would not make any investment which would

cause more than 15% of the value of its assets to be in-

vested in securities which are subject to legal or contractual

restrictions on resale or are otherwise not readily saleable.

39. The Fund regularly publishes and distributes to its

shareholders annual, semi-annual and quarterly reports,

—

4-75

Amended Answer of Defendant Oppenheimer Fund, Inc.

which clearly and accurately set forth all payments made

by the Fund to Management Corporation and to Oppen-

heimer & Co.

40. Upon information and belief, at or prior to the time

plaintiff became a shareholder of the Fund he received a

copy of the then current prospectus of the Fund, and since

he became a shareholder he has received copies of all an-

nual, semi-annual and quarterly reports of the Fund.

41. The Fund’s semi-annual report to its shareholders

for the period ending June 30, 1968, the quarterly report

for September 30, 1968, the report for year ended Decem-

ber 31, 1968 and subsequent reports all set forth that the

Fund had acquired securities under investment letters with

restrictions on transfer or resale and that the valuation

thereof had been determined by the Board of Directors of

the Fund.

42. At no time during the period referred to in the com-

plaint did the value of investment letter securities of the

Fund exceed 10% of the value of all of the securities of the

Fund.

43. To the extent that the value of the Fund’s invest-

ments in investment letter securities may be deemed mate-

rial, there was fair, adequate and timely disclosure thereof

to the shareholders of the Fund.

Szconp AFFirMaTIVE DEFENSE

44. The Fund repeats and realleges each of the allega-

tions contained in paragraphs 34 through 43, inclusive, of

this answer as fully as if set out at length herein.

A-76

Amended Answer of Defendant Oppenheimer Fund, Inc.

45. Section 2(a) (39) of the Investment.Company Act of

1940, 15 U.S.C. § 80a-2(a) (39), provides in relevant part

that with respect to assets of registered investment com-

panies the value of securities for which market quotations

are readily available shall be the market value of such se-

curities and the value of other securities and assets shall

be the fair value as determined in good faith by the Board

of Directors of the Investment Company. Rule 2a-4 of the

General Rules and Regulations issued by the Securities and

Exchange Commission under the Investment Company Act

of 1940 provides in relevant part that in computing the

price of Fund shares for the purpose of distribution, re-

demption and repurchase of portfolio securities for which

market quotations are readily available shall be valued at

current market value and other securities shall be valued at

fair value as determined in good faith by the Board of

Directors of the Fund.

46. At all times while the transferability of the securities

referred to in the complaint herein was restricted, the value

of each such security for the purposes referred to in the

complaint was determined in good faith by the Board of

Directors »f the Fund, and such value was in each case the

fair value thereof, in accordance with the requirements of

the aforesaid statute and Rule.

Tuirp AFFIRMATIVE DEFENSE

47. The Fund repeats and realleges each of the allega-

tions contained in paragraphs 34 through 43, inclusive, of

this answer as fully as if set out at length herein.

48. Upon information and belief, the plaintiff does not

fairly and adequately represent the interests of the share-

A-77

Amended Answer of Defendant Oppenheimer Fund, Inc.

holders of the Fund for, among other things, the following

reasons:

(a) The great majority of shareholders approved

the purchases of the restricted securities referred to

in the complaint and the valuation thereof by the Board

of Directors of the Fund;

(b) The plaintiff’s claims herein involve a conflict

of interest in that he seeks to recover for himself and

others damages for alleged overpayments which he

and others made to the Fund while at the same time

he seeks to sue derivatively on behalf of the Fund to

recover alleged overpayments made by the Fund to

others.

49. Upon information and belief, the plaintiff may not

maintain this action derivatively on behalf of the Fund or

representatively under Rule 23 of the Federal Rules of

Civil Procedure on behalf of the shareholders of the Fund.

FourtH AFFIRMATIVE DEFENSE

50. The Fund repeats and realleges each of the allega-

tions contained in paragraphs 34 through 43, inclusive, of

this answer as fully as if set out at length herein.

51. Upon information and belief, at no time prior to the

institution of this action did the plaintiff express to the

defendants disapproval of the matters of which he now

complains in the complaint herein.

52. Upon information and belief, the plaintiff and the

shareholders of the Fund have acquiesced in and approved

the matters and transactions alleged in the complaint, re-

A-78

Amended Answer of Defendant Oppenheimer Fund, Inc.

ceived the benefits of the securities acquired by the Fund,

and they have, therefore, waived the claims, if any, with

respect thereto and are barred from complaining of said

matters and transactions.

Frets AFFrimrMaTive DEFENSE

53. The Fund repeats and realleges each of the allega-

tions contained in paragraphs 34 through 43, inclusive, of

this answer as fully as if set out at length herein.

54. Shareholders of the Fund, including plaintiff, who

purchased Fund shares subsequent to receipt of the Fund’s

semi-annual report for the period ending June 30, 1968 or

of the Fund’s prospectus as supplemented on September 3,

1968 had due notice that the Fund had acquired and might

continue to acquire investment letter securities, and they

are therefore estopped to assert any claims with respect

to such securities acquired after such dates.

Sura Arrmuarwr DErense

55. Upon information and belief, since March 15, 1968

plaintiff and/or members of the Purchasing Class have

caused the Fund from time to time to redeem some or all

of their Fund shares.

56. At all relevant times, the method of valuing Fund

shares for purposes of redemption was the same as the

method of valuing Fund shares for purposes of sale, and

if restricted securities were overvalued in connection with

sale of Fund shares as alleged by plaintiff, they were

similarly overvalued in connection with redemption of

Fund shares.

A-79

Amended Answer of Defendant Oppenheimer Fund, Inc.

57. If the defendant Fund is liable to plaintiff and mem-

bers of the Purchasing Class in connection with the pur-

chase of Fund shares by reason of overvaluation of re-

stricted securities in the portfolio of the Fund, then plain-

tiff and members of the Purchasing Class who have re-

deemed Fund shares since March 15, 1968 have received

excessive amounts by reason of such alleged overvaluation

of restric'ed securities and are liable to the defendant Fund

to the extent thereof.

58. By reason of the foregoing, plaintiff and members

of the Purchasing Class are or may be liable to the defen-

dant Fund, wholly or in part, to the extent of the claims

alleged in the complaint herein.

Wuererorg, as to the plaintiff’s asserted class action in

Count One, the Fund demands judgment dismissing the

complaint herein, together with the costs and disburse-

ments of this action; and with respect to such action, if the

Fund is liable to plaintiff or others (including but not

limited to all persons similarly situated on whose behalf

plaintiff acts as representative) by reason of overvaluation

of restricted securities in the portfolio of the Fund, hold-

ing the plaintiff and all such others jointly and severally

liable to defendant Fund for all amounts received by them

or to which they are entitled to the extent that such amounts

were based upon overvaluation of restricted securities in

the portfolio of said Fund and setting off such amounts

against any amounts for which defendant Fund may be

liable to the plaintiff and all such others; and as to plain-

tiff's asserted derivative action in Count Two, the Fund,

although of the view that this action is wholly without

merit, leaves the disposition thereof to the Court; and as

A-80

Amended Answer of Defendant Oppenheimer Fund, Inc.

to both asserted causes of action the Fund requests such

other, further and different relief as may be just.

Wersman, CAA, Srert,

Mopurms & Wearrnemen

By „ 0. Joux Roar

A Member of the Firm

Attorneys for Defendant

Oppenheimer Fund, Inc.

425 Park Avenue

New York, New York 10022

Telephone No.: (212) 371-5400

A-81

Amended Answer of Defendant Edmund T. Delaney

No. 69 Civ. 1242° **

UNITED STATES DISTRICT COURT

Sour Disrarct or New Yorx

—against—

Leow Levy, Jack Nen, Eowuxp T. Detawey, Emanrven

CMA, Fate Hauser, Joseren M. McDanrmt, Ju, Srowey

M. Ronmms, Orrennemer Maxacement Corporation,

Orrernemer & Compary, and Orrernemer Fun, IN,,

Plaintiff,

in 69 Civ —4y AAR A

Relevant to these amended an-

ep IIA rr

not differ in any substantial way

Emanuel Celler, a defendant in this consolidated action, has

not filed an answer in 69 Civ. 1242 on the that he was not

validly served in that action. Mr. amended answer in

69 Civ. 2029 and 69 Civ. 2642 are the

A-82

Amended Answer of Defendant Edmond T. Delaney

the complaint except to the extent specifically admitted

or otherwise denied.

Paragraph Response

1 Admits information that plaintiff is a share-

holder as alleged except with respect to 4.196

shares purchased on June 21, 1968.

3 Admit only that this court has subject matter

jurisdiction of claims properly predicated on

the provisions of the cited statutes and the

doctrine of pendent jurisdiction.

47 Admitted.

8 Admitted except that the shareholdings re-

ferred to therein are admitted only as of De-

cember 31, 1967.

9 Admitted.

10 Admitted except that Jack Nash is an Assist-

ant Secretary and not the Secretary of Oppen-

heimer Management Corporation.

Admitted.

12 Admit only that the Fund filed a prospectus

for the sale of its shares with the Securities

and Exchange Commission which became

effective on March 14, 1968 which was re-

vised effective September 3, 1968 and that,

since March 15, 1968, shares of the Fund have

been sold by use of the mails and other in-

strumentalities of interstate commerce.

14 Admit, on information and belief, only that

the Fund purchased the securities referred to

therein subsequent to March 15, 1968.

A-83

Amended Answer of Defendant Edmond T. Delaney

2. Defendant reiterates and repeats each denial and ad-

mission to plaintiff's first cause of action and denies, upon

information and belief (except as to paragraphs “27”, “28”,

“30", “ and “33" which are denied on knowledge as to

his own acts), the allegations of each numbered paragraph

of the second cause of action of the complaint except to

the extent specifically admitted or otherwise denied as

follows

Paragraph Response

a4 Admits only that plaintiff purports to bring

this suit derivatively as to the Fund.

25 Admits information that plaintiff is a share-

holder as alleged except with respect to 4.196

shares purchased on June 21, 1968.

26 Admitted.

3. The complaint fails to state any claim within the

subject matter jurisdiction of this Court on which any re-

lief can or should be granted.

4 The claims alleged in the complaint or some of them

are barred, in whole or in part, by laches or the applicable

statutes of limitations.

5. Plaintiff has failed, without justification or legal ex-

Amended Answer of Defendant Edmond T. Delaney

Fovrrsa Derense

6. At all material times, the Fund was an open-end,

diversified, investment company of the management type.

incorporated under the laws of the State of New York and

registered with the Securities and Exchange Commission

(the “Commission”) under the Investment Company Act

of 1940. The Fund’s shares are registered under the Secn-

rities Act of 1933. The Fund conducts its business in com-

pliance with said acts and with the rules and regulations

issued thereunder by the Commission. ~

7. Shares of the Fund are offered for ale to the public

only pursuant to prospectuses issued at least annually by

the Fund. Each shareholder of Fund receives regularly

an annual and semi-annual report of Fund as well as, at

least annually, a proxy statement in connection with each

annual meeting of its shareholders. In addition, it is the

practice of the Fund to send to each shareholder a copy

of its latest prospectus as the same becomes effective.

8. All such proxy statements and prospectuses have,

prior to their release and delivery, been submitted for re-

view and scrutiny by the Staff of the Commission.

9. At all material times, said prospectuses, reports and

proxy statements have fully and fairly disclosed :

(a) All of the material relationships of and among

the Fund, its officers and directors, Oppenheimer Man-

agement Corporation and Oppenheimer & Co.

(b) all payments made by the Fund to Oppenheimer

Management Corporation and to Oppenheimer & Co.

agreements, sub-investment advisory agreements and

ASS

Amended Answer of Defendant Edmond T. Delaney

underwriting agreements from time to time proposed

or in force between and among the Fund, Oppenheimer

Management Corporation and Oppenheimer & Co.

10. The Fund's semi-annual report to its shareholders

for the period ending June 30, 1968, the quarterly report

of the Fund as of September 30, 1968 and the annual re-

port of the Fund for the year ended December 31, 1968,

as well as the subsequent reports of the Fund all set forth

that the Fund had acquired securities under letters of in-

vestment with restrictions on transfer or resale and that

the valuation thereof had been determined by the directors

of the Fund.

II. To the extent that the value of the Fund's invest-

ments in such securities may be deemed material, there

was fair, adequate and timely disclosure thereof both to

the shareholders of the Fund and to all purchasers of the

Fund's shares.

Forres Dre

12. The prospectus of the Fund, as supplemented on

September 3, 1968, set forth the extent of the Fund's in-

vestments in securities pursuant to investment letters and

stated that the Fund would not make any investment which

would cause more than 15% of the value of its assets to

be invested in such securities.

13. Plaintiff and all members of the class he purports

to represent who purchased shares of the Fund subsequent

to receipt of the Fund's semi-annual report for the period

ending June 30, 1968 or of the Fund's prospectus as sup-

plemented on September 3. 1968, had adequate and proper

notice that the Fund had acquired and might continue to

A-86

Amended Answer of Defendant Edmond T. Delaney

acquire portfolio securities pursuant to investment letters

and they are therefore estopped to assert any claim with

respect to purchases of the Fund’s shares subsequent to

such notice.

Smrn Derewse

14. Section 2(a)(3) of the Investment Company Act of

1940 provides, in relevant part, that the value of portfolio

securities held by registered investment companies for

which market quotations are readily available, shall be the

market value of such securities and that the value of other

portfolio securities and assets shall be the fair value thereof

as determined in good faith by the Board of Directors of

such registered investment company.

15. At all material times, the value of each portfolio

security acquired by the Fund pursuant to a letter of in-

vestment as alleged in the complaint herein was fixed and

determined in good faith by the directors of Fund and all

computations of the net asset value of the securities and

assets of the Fund for all purposes, including those alleged

in the complaint herein, were based on the values so fixed

and determined.

Severru Derewee

16. In the latter part of December 1967, the recommen-

dation of Oppenheimer Management Corporation that the

Fund invest a limited portion of its assets in securities

which had not been registered for public distribution under

the Securities Act of 1933 (provided such securities could

be purchased under an agreement which would provide for

their subsequent registration), was reviewed and approved

by the Fund’s Board of Directors, a majority of whom were

A-87

Amended Answer of Defendant Edmond T. Delaney

neither officers, directors nor otherwise affiliated with Op-

penheimer Management Corporation or Oppenheimer &

Company.

17. Such decision and the other matters alleged in the

complaint relate solely to the internal management of the

Fund, to wit, the character, quality and suitability of secu-

rities to be acquired and held in its portfolio.

18. Upon information and belief, all investments by the

Fund in unregistered securities have been within the lim-

itations of such approval.

19. The aforesaid approval by the Board of Directors

was a reasonable exercise of business judgment and such

approval is binding upon the Fund and upon all of its

shareholders, including plaintiff.

E1cHtx# Derrense

20. At the annual meeting of shareholders of the Fund

held in the latter part of April 1969 after the dissemina-

tion and distribution of the aforesaid reports, prospectuses

and proxy statements with the disclosures hereinabove de-

scribed and after the distribution of a proxy statement

for such meeting fully and fairly disclosing the institution

of this action and the nature of the charges and conten-

tions made therein, the directors of the Fund who had

approved the policy of limited investments in unregistered

securities and participated in the valuation of such se-

curities were re-elected by an overwhelming plurality of

the shareholders voting at such meeting in person or by

proxy.

A-88

Amended Answer of Defendant Edmond T. Delaney

21. The shareholders of the Fund, including plaintiff,

have approved and acquiesced in the matters and trans-

actions which are the subject matter of the complaint and

are barred and estopped from complaining of such mat-

ters and transactions.

Nintu Derense

22. On information and belief, plaintiff does not fairly

and adequately represent the interests either of the mem-

bers of the class he purports to represent, the Fund, or

its shareholders for, among other things, the following

reasons:

(a) Plaintiff’s claims herein involve a conflict of in-

terest in that he seeks to recover primarily against

the Fund, for himself and others, damages for alleged

overpayments on the purchase of Fund’s shares while,

at the same time, he seeks to sue derivatively on be-

half of the Fund to recover alleged overpayments

made by the Fund to its investment adviser and re-

deeming shareholders; and

(b) A great majority of shareholders of the Fund

approve the purchases and the policy of purchasing

the unregistered securities referred to in the complaint

and the valuation thereof by the directors of the Fund.

TENTH DEFENSE

23. Upon information and belief, since March 15, 1968

plaintiff and/or members of the Purchasing Class have

caused the Fund from time to time to redeem some or all

of their Fund shares.

24. At all relevant times, the method of valuing Fund

shares for purposes of redemption was the same as the

A-89

Amended Answer of Defendant Edmond T. Delaney

method of valuing Fund shares for purposes of sale, and

if restricted securities were overvalued in connection with

sale of Fund shares as alleged by plaintiff, they were sim-

ilarly overvalued in connection with redemption of Fund

shares.

25. If defendant is liable to plaintiff and members of the

Purchasing Class in connection with the purchase of Fund

shares by reason of overvaluation of restricted securities

in the portfolio of the Fund, then plaintiff and members

of the Purchasing Class who have redeemed Fund shares

since March 15, 1968 have received excessive amounts by

reason of such alleged overvaluation of restricted securi-

ties and are liable to the defendant to the extent thereof.

26. By reason of the foregoing, plaintiff and members

of the Purchasing Class are or may be liable to defen-

dant, wholly or in part, to the extent of the claims alleged

in the complaint herein.

ELevento DErense

27. After deduction of the sales charge, the price for

Fund shares purchased by plaintiff and members of the

Purchasing Class was paid to and received and retained

by the Fund.

28. If defendant is liable to plaintiff and members of

the Purchasing Class or to the Fund by reason of over-

valuation of restricted securities in the portfolio of the

Fund in connection with the sale or redemption, or both,

of Fund shares, then the Fund is liable to defendant

to the extent that the Fund has received excess amounts

from plaintiff and members of the Purchasing Class by

reason of such overvaluation.

A-90

Amended Answer of Defendant Edmond T. Delaney

29. By reason of the foregoing, the Fund is or may be

liable to defendant, wholly or in part, to the extent of

the claims alleged in the complaint here.

Wuererore, defendant demands judgment as follows:

1. Dismissing the complaint herein, together with the

costs and disbursements of this action;

2. If defendant is liable to plaintiff or others (includ-

ing but not limited to all persons similarly situated on

whose behalf plaintiff acts as representative and defen-

dant Oppenheimer Fund, Inc.) by reason of overvalua-

tion of restricted securities in the portfolio of said Fund,

holding the plaintiff and all such other jointly and sever-

ally liable to defendant for all amounts received by them

or to which they are entitled to the extent that such

amounts were based upon overvaluation of restricted se-

curities in the portfolio of said Fund and setting off such

amounts against any amounts for which defendant may

be liable to the plaintiff and all such others; and

3. Granting defendant such other, further and different

relief as may be just.

Dated: New York, N.Y.

June 22, 1973

Townsend & Lewis

By /s/ Jonn F. Davmsox

A Member of the Firm

Attorneys for Defendant

Edmund T. Delaney

Office and P.O. Address

120 Broadway

New York, N.Y. 10005

Telephone: (212) 267-6180

A-91

Answers of Defendants

Oppenheimer Management Corp., et al.,

to Plaintiffs’ Supplementary Interrogatories

UNITED STATES DISTRICT COURT

SourRERNX District or New York

69 Civil 1242

Invine SanpeErs,

Plaintiff,

—against—

Leon Levy, et al.,

Defendants.

Econ Tavssie,

Plaintiff,

—against—

Sxxr M. Rossrns, et al.,

Defendants.

MronaklL. SHazv and Rita Suazy,

Plaintiffs,

—against—

Eric Hauser, et al.,

Defendants.

Defendants, Oppenheimer Management Corporation, Op-

penheimer & Co., Leon Levy and Jack Nash, answer plain-

tiffs supplementary interrogatories dated February 27,

1973, upon information and belief as follows:

A-92

Answer of Defendants Oppenheimer Management

Corp., et al., to Plaintiffs’ Supplementary Interrogatories

1. Interrogatory 1. The number of shares of Oppen-

heimer Fund (“Fund”) sold, and the number of shares

the Fund redeemed on each business day between March

15, 1968 and December 31, 1970 are set forth in column 2

entitled daily subscriptions and in column 3 entitled daily

redemptions of the annexed schedule which is marked Ex-

hibit 1 and is made a part hereof.

2. Interrogatory 2. The total number of shares of the

Fund outstanding and the value of the net assets of the

Fund as of the close of the New York Stock Exchange on

each business day between March 15, 1968 and December

31, 1970, are set forth in columns 4 and 5 of Exhibit 1.

o 8 > 2 @

Dated: New York, New York

March 29, 1973

OprpENHEIMER MANAGEMENT CORPORATION

By /s/ Rosert G. Gat

Robert G. Galli, Administrative

Vice President and Secretary

A-93

Answer of Defendants Oppenheimer Management

Corp., et al., to Plaintiffs’ Supplementary Interrogatories

Strate or New York,

County or New York, ss.:

Rosert G. Galla, being duly sworn, deposes and says,

that he is the Administrative Vice President and Secretary

of Oppenheimer Management Corporation; that he has

read the foregoing answers to plaintiff's interrogatories

and knows the contents thereof; that the same are true to

deponent’s knowledge, except as to matters therein stated

to be alleged upon information and belief and as to those

deponent believes them to be true.

7s, Rosert G. Gaui

Robert G. Galli

[Sworn to March 29, 1973]

Defendants Oppenheimer & Co. Leon Levy and Jack

Nash adopt the answers to plaintiff’s supplementary inter-

rogatories herein, and agree that they will be bound by

the same.

March 29, 1973

OprENHEIMER & Co.

By: /s/ Jack Nasu

/8/ Leon Levy

Leon Levy

/s/ Jack NasH

Jack Nash

4 94

Answer of Defendants Oppenheimer Management

Corp., et al., to Plaintiff's’ Supplementary Interrogatories

EXHIBIT 1

OPPENHEIMER FUND INC.

Capital Stock

— mea Outstanding Total

Date — —— Shares Net Assets

March 1968

28 18.549 16,364 20,743,192 $148,783,980.67

November 1969

7 58.170 14,000 39,776,879 333.594.812. 00

April 1970

24 65,533 17,696 45,072,096 294,215,334.87

A-95

Interrogatories dated February 7, 1973 of Defendants

Oppenheimer Management Corp., et al.,

Directed to Plaintiffs

UNITED STATES DISTRICT COURT

Sourumax Disrarct or New York

[same rr]

Puease Take Notice that the plaintiffs are required to

serve and file pursuant to Rule 33 of the Federal Rules

of Civil Procedure their separate answers under oath to

the following interrogatories :

1. With respect to the plaintiff Irving Sanders:

(a) What is his residence address?

(b) What is his business address?

(e) What is his occupation?

2. With respect to the plaintiff Egon Taussig:

(a) What is his residence address?

(b) What is his business address?

(e) What is his occupation?

3. With respect to plaintiffs Michael Shaev and Rita

Shaev :

(a) What are their residence addresses?

(b) What are their business addresses?

(e) What are their occupations?

A-96

Interrogatories dated February 7, 1973 of Defendants

Oppenheimer Management Corp., et al.

Directed to Plaintiff's

4. With respect to shares of stock of the defendant

Oppenheimer Fund, Inc. (hereinafter referred to as the

“Fund”) purchased by the plaintiffs Irving Sanders, Egon

Taussig, Michael Shaev and Rita Shaev, stated separately

as to each plaintiff:

(a) What was the exact number of shares of the

Fund in which the plaintiffs had a beneficial interest

in whole or in part, at the time of commencement of

this action, and in what name or names were said

shares registered?

(b) When did the plaintiffs first acquire a beneficial

interest in shares of the Fund, stating the number

of such shares, the price paid for such shares, the

name or names in which said shares were registered

and the name and address of the dealer or other sellers

from whom such shares were purchased?

in any shares of the Fund held in any name other than

theirs? If so, state the nature of plaintiffs’ interest,

A-97

Interrogatories dated February 7, 1973 of Defendants

Oppenheimer Management Corp., c al.

Directed to Plaintiff's

the number of shares, and the name or names in

which such shares are registered.

5. Have the plaintiffs, Irving Sanders, Egon Taussig,

Michael Shaev and Rita Shaev (hereinafter referred to

as “plaintiffs”) at any time since they acquired an interest

in shares of the Fund sold or required the Fund to re-

deem any of their shares of the Fund! If so, as to each

plaintiff state the date when each such sale or redemp-

tion was effected, the number of shares sold or redeemed,

and the price realized on each such sale or redemption.

Dated: New York, N.Y.

February 7, 1973

Gvuecexuemen & Usteauyer

Attorneys for Defendants

Oppenheimer Management Cor-

poration, Oppenheimer & Co,,

Leon Levy and Jack Nash

80 Pine Street

New York, N.Y.

Telephone 344.2040

A-98 A-99

Plaintiff Sanders’ Answers to Defendants’ latervrogatones

Plaintiff Sanders’ Answers to Defendants’ Verified March 27, 1973

Interrogatories Verified March 27, 1973

a No. of

COURT | Date of Shares Price Basis of

I ˙·— Pm — *. —

1/23/67 11.305 $24.26 Purehase

1/31/67 627 23.65 Cap Gain

2 67 1.991 23.73 Purchase

— 3/31 67 1918 4.63 Purchase

— — 1 87 1.822 25.94 Purchase

Plaintiff Sanders answers the defendants’ interrogatories 5 20 87 1.849 25.55 Purchase

dated February 7, 1973, upon information and belief except —— 3 — —

as to interrogatories 1 through 10 Which are answered upon 5 Cap

| 6 30 67 018 25.73 Ine Divd

A f 83/67 LOTS 27.76 Purchase

l(a) 5009 Broadway, New York, New York. 829,67 18 26.54

(b) None. 9/28/67 1.731 27.29 Purchase

10/31/67 1.733 27.27 Purchase

(e) Retired. 11/29/67 1.726 27.37 Purchase

: 1/2/68 1.636 28.42 Purchase

. = 1/22/68 1.7233 27.86 Purchase

1/31/68 5.619 2M Cap Gain

3. Not applicable. 2

1 Sanders. 2/28, 68 6.553 7.21 Purchase

4(a) 209.825 shares; Irving | —— —

(b) I purchased 2.71 shares in my name at $22.70 per 5/1/68 5.657 822 Purchase

Mutual Ser-

share on December 23, 1966, through Bassuk 5/28/68 —

viee Corp. 6/21/68 4.196 as Cap Gain

e) I subsequently purchased of Oppenheimer Fund 6/28/68 5.456 8 66 Purchase

1 5 5.720 8.26 Purchase

Corp. and its successors-in-interest as follows 8/29/88 5.585 846 Purchase

9/27/68 5.089 OM Purchase

10/31/68 5.083 9.35 Purchase

12/5/68 4 10.0 Purchase

A-100

Plaintiff Sanders’ Answers to Defendants’ Interrogatores

Verified March 27, 1973

No. of

Acquisition Shares Price Basis of

Date of Acquired Per Share Acquisition

1/3/69 4.817 9.81 Purchase

1/29/69 4.984 9.63 Purchase

1/31/69 10.523 9.21 Cap Gain

3/3/69 5.678 8.19 Purchase

4/7/69 5.686 831 Purchase

4/30/69 5.275 9.10 Purchase

5/29/69 5.369 8.80 Purchase

6/20/69 1.164 7.77 Ine Divd

6/20/69 4.075 7.77 Cap Gain

7/1/69 5.871 7.92 Purchase

6/19/70 3.293 6.10 Ine Divd

2/29/72 * 9.36 Ine Divd

2/29/72 448 9.36 Cap Gain

2/5/73 454 8.16 Ind Divd

2/5/73 2.932 8.16 Cap Gain

(d) No.

5. I redeemed 200 shares of the Fund on April 30,

at $8.87 per share.

A-101

Plaintiff Sanders’ Answers to Defendants’ Interrogatories

Verified March 27, 1973

Srate or New Yor,

County or New York, 88.

Irving Sanders, being duly sworn, deposes and says that

he is one of the plaintiffs in the above action; that he has

read the foregoing answers to defendants’ interrogatories

and knows the contents thereof; that the same are true to

deponent’s knowledge except as to matters therein stated

upon information and belief and as to those, deponent be-

lieves them to be true.

/s8/ Iv Sanvers

Irving Sanders

[Sworn to March 27, 1973]

A-102

Plaintiff Shaevs’ Answers to Defendants’

Interrogatories Verified March 30, 1973

UNITED STATES DISTRICT COURT

SoutHern District or New York

[SAME TITLE]

Plaintiffs Shaev answer the defendants interrogatories

dated February 7, 1973, upon information and belief ex-

cept as to interrogatories 1 through 10 which are alleged

upon knowledge as follows:

1. Not applicable.

2. Not applicable.

3(a) 19 Twin Rivers Drive, North East Windsor, New

Jersey.

(b) Michael Shaev—247 Huyler Street, South Hacken-

sack, New Jersey.

4(a) 45.071 shares—Michael Shaev and Rita Shaev as

joint tenants.

(b) We purchased 22.599 shares in our joint names at

$8.85 per share on April 24, 1968 through Kurz-Liebow

& Co., Ine. a

(e) We subsequently purchased shares of Oppenheimer

Fund (“the Fund“) in our joint names through Kurz

Liebow & Co., Inc. as follows:

A-103

Plaintiffs Shaevs’ Answers to Defendants’ Interrogatories

Verified March 30, 1973

No. of

Date of Shares Price Per Basis of

Acquisition Acquired Share Acquisition

6/21/68 .639 $ 8.84 Cap. gain $0.25

10/ 1/68 19.512 10.25 Purchase

1/31/69 2.321 9.21 Cap. gain $0.50

6/20/69 812 7.77 Cap. gain $0.14

6/20/69 .232 7.77 Inc. Divd $0.04

6/19/70 643 6.10 Inc. Divd $0.08

2/26/71 1.179 7.93 Ine. Divd $0.20

(d) No.

5. We redeemed 40 shares of the Fund on September

29, 1971 at $8.61 per share.

Dated: New York, New York

March 30, 1973

A-104

Plaintiffs Shaevs’ Answers to Defendants’ Interrogatories

Verified March 30, 1973

State of New York,

County of New York, ss.:

Michael Shaev, being duly sworn, deposes and says that

he is one of the plaintiffs in the above action; that he has

read the foregoing answers to defendants’ interrogatories

and knows the contents thereof; that the same are true

to deponent’s knowledge except as to matters therein stated

upon information and belief and as to those, deponent be-

lieves them to be true.

/s/ MioRHARL SHarv

Michael Shaev

[Sworn to March 30, 1973]

A-105

Plaintiff Taussig’s Answers to Defendants’

Interrogatories Verified April 9, 1973

UNITED STATES DISTRICT COURT

SoutHern District or New York

[SAME TITLE]

Plaintiff Taussig answers the defendants interrogatories

dated February 7, 1973, upon information and belief ex-

cept as to interrogatories 1 through 10 which are alleged

upon knowledge as follows:

1. Not applicable.

2.(a) 3905 Point East Drive, North Miami Beach, Florida.

(b) Retired.

3. Not applicable.

4. (a) 2369.365 shares—Egon Taussig.

(b) I purchased 2302.026 shares in my name at $10.86

per share on December 24, 1968 through Equity Fundi

Securities Corp. ea

Fund (“the Fund”) in my name through Equity Funding

Securities Corp. as follows:

A-106 A-107

Plaintiff Taussig’s Answers to Defendants’ Plaintiff’ Taussig’s Answers to Defendants

Interrogatories Verified April 9, 1973 Interrogatories Verified April 9, 1973

Date of No. of Shares Price Per Basis of No. of Shares *

Acquisition Acquired Share Acquisition Date Redeemed Share

1/31/69 124.974 $9.21 Cap. Gain 5/8/70 19.968 6.26

6/20/69 40.626 7.77 Cap. Gain 6/8/70 20.392 6.13

6/20/69 11.607 7.77 Ine. Divd 7/15/70 21.368 5.85

6/19/70 29.282 6.10 Inc. Divd 8/6/70 19.778 6.32

2/26/71 50.101 7.93 Ine. Divd 9/9/70 18.519 6.75

2/5/73 18.163 8.16 Ine. Divd 10/8/70 17.680 7.07

2/5/73 117.197 8.16 Cap. Gain 11/9/70 17.986 6.95

(d) No 12/7/70 16.938 7.38

1/7/71 16.404 7.62

5. I redeemed shares of the Fund as follows: 2/5/71 15.509 8.06

No. of Shares Price Per —— * —

Date Redeemed Share 5/10/71 14.318 8.73

2/11/69 13.736 $9.10 6/9/71 14.302 8.74

3/10/69 15.188 8.23 7/12/71 14.124 8.85

4/8/69 14.899 8.39 8/9/71 15.356 8.14

5/8/69 13.812 9.05 9/9/71 13.998 8.93

5/15/69 100.000 9.00 10/11/71 14.108 8.86

6/9/69 14.620 8.55 11/9/71 14.881 8.40

7/8/69 15.783 7.92 12/9/71 14.451 8.65

8/7/69 16.447 7.60 1/11/72 13.661 9.15

9/8/69 16.534 7.56 2/9/72 13.284 9.41

10/7/69 15.883 7.87 3/9/72 12.887 9.70

11/7/69 14.899 8.39 4/11/72 12.513 9.99

12/8/69 16.426 7.61 5/9/72 13.528 9.24

1/8/70 16.383 7.63 6/9/72 13.499 9.26

2/9/70 17.756 7.04 7/11/72 13.587 9.20

3/6/70 17.313 7.22 8/9/72 13.383 9.34

4/7/70 17.781 7.03 9/11/72 13.873 9.01

10/10/72 14.205 8.80

A-108

Plaintiff Taussig’s Answers to Defendanis’

- Interrogatories Verified April 9, 1973

No. of Shares Price Per

Date Redeemed Share

11/9/72 13.767 9.08

12/11/72 12.860 9.72

1/9/78 12.994 9.62

2/9/73 15.281 8.18

Dated: New York, New York

April 9, 1973

n /s/ Foo Tavesto

Egon Taussig

Stare or Fiona,

stated upon information and belief and as to those, de-

ponent believes them to be true.

' /a/

[Sworn to April 9, 1973]

A-109

Plaintiffs’ Notice of Motion for Class Action Treatment

dated March 30, 1973

UNITED STATES DISTRICT COURT

Sovursern Desert of New York

[same anal

Pian Take Norten, that upon the affidavit of Donald

N. Ruby, sworn to March 30, 1973, and upon the pleadings

and all prior proceedings herein, the undersigned will move

this Court in Court Room 607-H of the United States Court

House, Foley Square, New York, New York, on the 18th

day of April, 1973, at 10:00 A.M. or as soon thereafter as

counsel can be heard for an order pursuant to Rule 23(¢) (1)

of the Federal Rules of Civil Procedure, declaring that this

consolidated action be maintained as a class action, and

for such other and further relief as this Court may deem

just and proper.

Dated: New York, New York

March 30, 1973

Yours, ete.

Wa Porrern Ross Water & Jowes

By Doxup N. Rusy

A Member of the Firm

General Counsel for Plaintiffs

845 Third Avenue

New York, New York 10022

PL 9-4600

A-110

Plaintiffs’ Notice of Motion for Class Action Treatment

dated March 30, 1973

To:

Gveerxuemen & UnTerm ver

Attorneys for Oppenheimer Management

Corporation, Oppenheimer & Company, |

Leon Levy and Jack Nash 1

80 Pine Street

New York, New York 10005

Winx CMA AAA Sretr

Suermesno, Esqs. .

Attorneys for Oppenheimer Fund, Inc.

1501 Broadway

New York, New York 10036

Townsenn & Lew

Attorneys for Edmund Delaney, et al.

120 Broadway

New York, New York 10005

A-lll

Supporting Affidavit of Donald N. Ruby

UNITED STATES DISTRICT COURT

Sour Drsrarct or New Loa

— — —

[same trrue)

——

State or New Yorx,

County or New Yoax, ss.:

Donald N. Ruby, being duly sworn, deposes and says:

1. Lam a member of the firm of Wolf Popper Ross Wolf

& Jones, general counsel for the plaintiffs in this con-

solidated action. This affidavit is submitted in support of

the plaintiffs’ motion for an order pursuant to Rule

Wie) (I) of the Federal Rules of Civil Procedure, declar

ing that this consolidated action may be maintained as a

class suit on behalf of persons who purchased shares of

Oppenheimer Fund (“the Fund”) during the period March

28, 1968 to April 24, 1970.

2. The Sanders action was commenced on March 26,

1969, and the Taussig and Shaev actions were commenced

on May 12, 1969 and June 18, 1969, respectively. Said ac-

tions were brought by plaintiffs representatively on behalf

of themselves and other persons similarly situated who

purchased shares of the Fund since March, 1968, and de-

rivatively on behalf of the Fund. Said actions are based

upon violations of the Securities Act of 1933, the Securities

Exchange Act of 1934 and the Investment Company Act

of 1940 and Rules promulgated thereunder and are brought

against Oppenheimer Management Corporation (“the

A-112

Supporting Affidavit of Donald N. Ruby

Manager”) which is the investment adviser to the Fund

and the general distributor of its shares, Oppenheimer &

Company which owns all the voting stock of the Manager

and the directors of the Fund.

3. The complaints in said actions allege, in substance,

that the defendants other than the Fund caused the Fund

to issue prospectuses which were false and misleading in

that, among other things, they failed to state that the Fund

would purchase restricted securities and the risks involved

with respect to the purchase of restricted securities and

they stated that the Fund’s shares were being offered at

net asset value which was not the case as a result of the

improper valuation by the defendants of restricted secu-

rities in the portfolio of the Fund; that the defendants

caused the Fund to issue periodic reports which were false

and misleading in connection with the valuation of re-

stricted securities in the portfolio of the Fund, and the

net asset value of shares of the Fund; that the defendants

other than the Fund caused the Fund to improperly value

the restricted securities in the Fund's portfolio in violation

of the Investment Company Act, the Securities Exchange

Act and the Securities Act, and that the plaintiffs and other

persons similarly situated who purchased shares of the

Fund since March, 1968 were caused to pay false and in-

flated prices for their shares of the Fund as a result there-

of. The plaintiffs seek to recover damages for themselves

and other persons similarly situated for overpayments on

purchases of shares of the Fund. The complaints further

charge that as a result of the improper valuation of re-

stricted securities in the Fund's portfolio, the Fund was

caused to pay the Manager excessive fees under its man-

agement agreement and to redeem shares at inflated prices,

A-113

Supporting Afidarit of Donald N. Ruby

thereby wasting the Fund's assets. The plaintiffs also seek

to recover on behalf of the Fund the damages sustained by

A-1l4

Supporting Affidavit of Donald N. Ruby

herein. Accordingly, the plaintiffs intend to move for sum-

mary judgment on the issue of liability.

6. The plaintiffs respectfully submit that this Court

should determine that this consolidated action may be

maintained as a class action since the plaintiffs have sat-

isfied the requirements of Rule 23(a) and Rule 23(b)(3)

of the Federal Rules of Civil Procedure. The requirements

of Rule 23 are discussed in detail in the plaintiffs’ memo-

randum of law and will not be repeated at length herein.

However, I will briefly in this affidavit refer to some of

the matters relating thereto.

7. There can be no dispute that the class is so numerous

that joinder of all members is impracticable. It appears

from the reports issued by the Fund that there are at least

50,000 persons who purchased shares of the Fund during

the period March 28, 1968 to April 24, 1970, and allegedly

paid false and inflated prices for their shares as a result

of the defendants’ improper evaluation of restricted secu-

rities in the portfolio of the Fund. March 28, 1968 is the

first day restricted securities were included in the Fund’s

portfolio, and April 24, 1970 is the date of the prospectus

in which the defendants for the first time disclosed to the

investing public the methods used by them in valuing re-

stricted securities in the portfolio of the Fund and certain

information relating thereto.

8. There can also be little doubt that there are common

questions of law and fact which warrant the maintenance

of this consolidated action as a class suit. Indeed, the

basis for the Court in having previously consolidated these

actions and having enjoined any additional actions from

being brought by members of the class was the recognition

A-115

Supporting Affidavit of Donald N. Ruby

that the claims of the members of the class were based upon

common issues of law and fact. These common questions of

law and fact include the following:

(a) Whether the prospectuses issued by the Fund dur-

ing the period in question were false and misleading in

that they failed to state that the Fund would purchase

restricted securities;

(b) Whether the prospectuses were false and misleading

because of their failure to state the risks involved with

respect to the purchase of restricted securities;

in failing to state the methods utilized by — in

valuating the restricted securities;

(d) Whether the prospectuses were false and misleading

in stating that the Fund's shares were being offered at net

asset value, when a good faith” determination of the value

of restricted securities of the Fund was not made;

(e) Whether the periodic reports issued by the Fund

were false and misleading in failing to disclose the methods

used in valuing restricted securities in the portfolio of the

Fund and information relating thereto and with regard

to the net asset value of shares of the Fund and the inves.

ment performance of the Fund;

(f) Whether it was improper and a violation of the In-

vestment Company Act Section 2(a) (41) and Rule 2a-4

thereunder and Rule 10b-5 for defendants to have valued

restricted securities in the Fund portfolio by applying an

absolute dollar discount to the market quotations for unre-

stricted securities of the same class, without regard to other

relevant factors;

A-116

Supporting Affidavit of Donald N. Ruby

(g) Whether it was improper and a violation of the In-

vestment Company Act Section 2(a)(41) and Rule 2a-4

thereunder, and Rule 10b-5 for defendants to have valued

the convertible notes in the Fund’s portfolio by assuming

a constant percentage premium over the conversion value

of the common stock into which said notes were convertible,

without regard to other relevant factors and by automa-

tically assuming that said premium would equal the dis-

count attributable to the fact that said securities were

restricted without regard to other relevant factors;

(h) Whether it was improper and a violation of the In-

vestment Company Act Section 2(a) (41) (formerly Section

2(a)(39)) and Rule 2a-4 thereunder, and Rule 10b-5 for

defendants to have valued restricted securities in the Fund’s

portfolio by applying a constant percentage discount to the

market quotations for unrestricted securities of the same

class, without regard to other relevant factors ; and

(i) Whether the methods used by defendants in valuing

restricted securities in the Fund’s portfolio satisfied the

requirements of Section 2(a)(41) and Rule 2a-4 that re-

stricted securities be valued at fair value as determined

in “good faith” by the board of directors and, if not,

whether defendants are liable to the class for having vio-

lated the Securities Act of 1933, the Securities Exchange

Act of 1934 and the Investment Company Act of 1940.

9. The claims of the plaintiffs are typical of the class.

Plaintiff Sanders purchased shares on numerous occasions

throughout the period involved from March 28, 1968 to

April 24, 1970, and plaintiffs Taussig and Shaev also pur-

chased shares of the Fund on several occasions during this

period. All of the aforesaid purchases were allegedly made

A-117

Supporting Affidavit of Donald N. Ruby

at false and inflated prices as a result of the defendants’

improper valuation of restricted securities in the portfolio

of the Fund.

10. As shown in our accompanying memorandum of law,

two factors of great importance in determining whether

the plaintiffs will “fairly and adequately protect the inter-

ests of the class” as required by Rule 23, are whether

the plaintiffs will vigorously prosecute the litigation and

whether their attorneys are qualified, experienced and gen-

erally able to conduct the litigation. It is evident from the

extensive discovery proceedings which have already taken

place that the plaintiffs have vigorously prosecuted this

action. Furthermore, I respectfully submit to the Court

that our firm, as general counsel for the plaintiffs, possesses

the qualifications necessary to properly represent the in-

terests of the class in this action. We have had considerable

experience in the field of corporate practice and, in par-

ticular, in stockholder’s actions. The other members of

my firm and I have tried and argued cases in the federal

courts including the Supreme Court of the United States,

in the New York State Courts and the courts of a number

of other states. I take the liberty of bringing the following

specific matters to the attention of the Court.

11. On March 17, 1971, Judge Milton Pollack, presiding

at a settlement hearing in a derivative action entitled

Zerkle, et al. v. Cleveland-Clif's Iron Co., et al., 70 Civ 2507,

made the following comment about our firm:

“I know of your standing in the community and also

your standing at the Bar, and have a very high opinion

of the expert knowledge, competence and fairness with

which you conduct derivative litigation.”

A-118

Supporting Affidavit of Donald N. Ruby

12. In a series of class actions entitled Berland v. Great

American Industries, et al., 66 Civ. 1755, et al., Judge Mans-

field appointed our firm as General Counsel for all the

plaintiffs. Thereafter, in deciding a motion to declare the

consolidated action as a class action, Judge Mansfield had

occasion to refer to his earlier appointment of our firm as

General Counsel for the consolidated action. In that con-

nection, in his opinion (48 F.R.D. 121 (S.D.N.Y. 1969)),

he said about our firm’s representation of the plaintiffs (at

p. 127):

“They are represented by outstanding counsel who

are experienced in the conduct of stockholders’ litiga-

tion and aware of their responsibilities.”

He added (at p. 127):

„We are satisfied, therefore, that both plaintiffs and

their counsel would adequately represent the class in

that there is no likelihood that they would handle or

dispose of the litigation in a collusive manner or act

in any way antagonistic to the interests of the class.”

At a later point (at p. 128) he referred to our firm as the

plaintiffs’ “high-calibre, experienced counsel.” The actions

were recently settled with substantial benefits gained by

the members of the class.

13. Finally, it is clear that a class action is superior to

any other available method for the fair and efficient adjudi-

eation of this controversy. Indeed, since the damages to

any single member of the class may be insufficient to justify

the commencement of a separate action for the relief sought

herein, a class action is no doubt the only meaningful

method by which the rights of the members of the class

A-119

Supporting Affidavit of Donald N. Ruby

can be effectively enforced. Moreover, it is evident from

the Order of consolidation enjoining any further actions

by members of the class that it was contemplated that the

plaintiffs in these actions would represent the interests of

oihe: members of the class and that the claims of other

members of the class would be enforced through the main-

tenance of this action as a class suit.

14. With respect to the question of notice to the mem-

bers of the class, we assume that the defendants have the

names and addresses of the persons who purchased shares

of the Fund during the period involved and that an ap-

propriate notice can be sent to these persons in one of the

regular mailings which the Fund makes to its shareholders.

15. We respectfully submit that in accordance with the

authorities set forth in our memorandum of law any costs

relating to the notice such as the preparation of the notice

should be paid by the defendants since the defendants are

better able to bear the cost of the notice, the defendants,

in obtaining an order enjoining any other members of the

class from bringing similar actions against them, clearly

evidenced a desire to have this action maintained as a class

action and to have the rights of all members of the class

determined herein and the claims asserted against the de-

fendants herein for violation of the Investment Company

Act and the Securities Exchange Act are well founded as

plaintiffs will show on their motion for summary judgment

on the issue of liability. We respectfully suggest, however

that the Court defer a determination as to who should wey

for the costs of notice or how the costs should be allocated

between the parties pending the submission of plaintiffs’

motion for summary judgment on the issue of liability. The

Court will, no doubt, be iz a better position to make a de-

A-120

Supporting Affidavit of Donald N. Ruby

termination on this question after a review of the papers

submitted in connection with said motion.

16. We respectfully submit that it would be a fair exer-

cise of discretion for this Court under the circumstances

in this case to require the defendants to pay the cost of

notice to the members of the class, particularly if the Court

concludes after reviewing the papers submitted in connec-

tion with plaintiffs’ motion for summary judgment on the

issue of liability that the plaintiffs’ claims have substantial

merit.

17. It is respectfully submitted that the plaintiffs’ motion

for an order, pursuant to Rule 23 (e) (1) of the Federal

Rules of Civil Procedure, determining that this action may

be maintained as a class action on behalf of the persons

who purchased shares of the Fund during the period March

28, 1968 to April 24, 1970, should be granted.

/s/ Dox Al N. Rusy

[Sworn to March 30, 1973]

A-121

Affidavit of Leon H. Tykulsker Sworn to April 13, 1973

UNITED STATES DISTRICT COURT

SoutHern District or New York

[SAME TITLE]

State or New York,

County or New York, ss.:

Leon H. Tyxutsxer, being duly sworn, says:

1. I am a member of the firm of Guggenheimer & Unter-

myer, attorneys for defendants Oppenheimer Management

Corporation, Oppenheimer & Co., Leon Levy and Jack

Nash (herein called the “Oppenheimer Defendants”). I

make this affidavit in connection with plaintiffs’ motion

for an order pursuant to Rule 23(c)(1) FRCP to authorize

maintenance of the consolidated action as a class suit on

behalf of persons who purchased shares of stock of defen-

dant Oppenheimer Fund, Inc. (the Fund“) during the

period March 28, 1968 to April 24, 1970.

Context in Which Actions Arise

2. This consolidated action is brought in connection with

plaintiffs’ claims that the Board of Directors of the Fund

overvalued restricted securities in the portfolio of the Fund

and that adequate disclosure with respect to such restricted

securities was not made by the Fund. The Fund is an

open-end investment company registered under the Invest-

ment Company Act of 1940. Its shares are registered

under the Securities Act of 1933. Fund shares are offered

A-122

Affidavit of Leon H. Tykulsker Sworn to April 13, 1973

for sale and sold continuously by the Fund. Shareholders

who wish to liquidate their interests do so by selling the

shares back to the Fund.

3. Among shareholder accounts of the Fund is the

Oppenheimer Systematic Capital Accumulation Program

(“OSCAP”). OSCAP is also an investment company reg-

istered under the Investment Company Act of 1940 but it

is an investment company of the unit investment trust type.

It is organized as a custodianship, with State Street Bank

and Trust Company of Boston, Massachusetts, as the Cus-

todian. OSCAP does not have a Board of Directors and

it issues “plans” to participants, each of which represents

an undivided interest in units of Fund shares. When the

account of the OSCAP planholder is liquidated, the Cus-

todian sells the Fund shares to the Fund and the proceeds

are credited to the OSCAP planholder.

4. As of March 31, 1973 the Fund had under manage-

ment net assets of approximately $523,243,571. As of said

date there were 67,726,541 shares of the Fund outstanding

owned by approximately 86,063 shareholder accounts and

by OSCAP for 87,894 accounts of OSCAP planholders.

The net asset value per share was $7.72. As of said date

the plaintiffs Shaev owned 8+ (a fraction) shares, plain-

tiff Taussig owned 1,868+ shares, and plaintiff Sanders

had credited to his account as a planholder of OSCAP 46+

shares.

5. During the period from March 26, 1969 through June

18, 1969, when plaintiffs instituted their respective actions

the number of Fund shares outstanding ranged from ap-

proximately 30,995,000 te 33,750,000 shares. The number

A-123

Affidavit of Leon H. Tykulsker Sworn to April 13, 1973

of shares which plaintiffs owned or had an interest in as

of the date they instituted their respective actions were as

follows:

Date action

Plaintiffs instituted No. of Shares

Sanders March 26, 1969 209.823“

Taussig May 12, 1969 2369.365

Shaev June 18, 1969 45.071

6. During the period which plaintiffs propose to inelude

in their class action (March 28, 1968 to April 24, 1970),

the alleged overvaluation of restricted securities consti-

tuted a relatively insignificant segment of the portfolio of

the Fund. We do not know the details of plaintiffs’ claims

as to overvaluation, since they have failed to answer the

interrogatories on this subject propounded by the Oppen-

heimer Defendants. If it be assumed that plaintiffs claim

an overvaluation of as much as 10%, the amount involved

is well below 1% of the Fund’s assets. The relative

amounts involved can be seen from the following table

(derived from quarterly reports to Fund shareholders

and rounding off the thousands):

Mar. 31,1968 $150,577,000 $ 1,005,000 6 100,000 1/150f 1%

Sept. 30,1968 232,083,000 19,491,000 1,949,000 4/5 of 1%

Mar. 31,1969 265,279,000 8,453,000 345,000 3/10 of 1%

Sept. 30,1969 298,899,000 7,033,000 703,000 3/10 0f 1%

Mar. 30,1970 315,229,140 3,078,000 307,000 1710 0f 1%

* Number of shares in which interested under OSCAP plan.

A-124

Affidavit of Leon H. Tykulsker Sworn to April 13, 1973

Notice

13. Plaintiffs seek to maintain this consolidated action

a class action pursuant to FRCP Rule 23(b)(3). Rule 23

(c)(2) requires that in any class action maintained under

subdivision (b)(3), the Court shall direct to the members

of the class the best notice practicable under the circum-

stances, including individual notice to all members who

can be identified through reasonable effort.

14. The effort and expense involved in ascertaining and

giving notice to members of the class in the instant ac-

tion can be expected to be considerable. I am informed

that during the period designated by plaintiffs (namely,

March 28, 1968 to April 24, 1970) there were approx-

imately 121,000 shareholder accounts which purchased

Fund shares. Of this total, approximately 41,400 were

new shareholder accounts of the Fund, approximately

54,600 were new purchasers of OSCAP plans, and ap-

proximately 25,000 were existing shareholder accounts of

the Fund or existing holders of OSCAP plans. Obviously

there would be a significant decrease in the numbers of

shareholders accounts involved if the relevant period were

deemed to terminate on a date earlier than that proposed

by plaintiffs.

15. The expense of giving notice to members of the

class can be expected to be considerable in view of the

size of the class—namely, approximately 121,000 accounts.

Plaintiffs counsel offhandedly states in his moving affi-

davit (at p. 14) that he “assumes” the defendants have

the names and addresses of the persons who purchased

shares of the Fund during the period involved and that

an appropriate notice can be sent to them in one of the

A-125

Affidavit of Leon H. Tykulsker Sworn to April 13, 1973

regular mailings which the Fund makes to its shareholders.

However, in fact it will require considerable labor and

expense to ascertain the names and addresses of all such

purchasers, since the current list of shareholders of the

Fund includes many who are not members of the class

and a considerable number of members of the class are

probably no longer current shareholders. Moreover, mail-

ing a notice, as suggested by plaintiff’s counsel, to current

shareholders is objectionable on a number of grounds.

First, such notice will not reach members of the class who

are no longer shareholders. Second, such notice will be

received by many shareholders who are not members of

the class and is likely to cause substantial damage to the

Fund and its shareholders; such a notice may well panic

unsophisticated shareholders into believing their invest-

ments are endangered with consequent large scale requests

for the Fund to redeem. Third, the cost of a mailing

to current shareholders will be substantial. I am informed

that a single letter mailing to current 174,000 shareholder

accounts will cost about $21,300, which amount includes

postage but does not include the cost of printing the

notice.

16. Not unexpectedly, plaintiff's counsel urges that the

cost of any notice to the class should be borne by the

defendants. His contentions in this respect are without

merit. As set forth in the memorandum of law submitted

on behalf of the Oppenheimer Defendants, the cost of a

class action notice is normally to be borne by plaintiffs,

since they have initiated the litigation. Defendants have

already been put to very considerable expense in connec-

tion with these litigations—not only for legal services but

also in terms of executive time required to meet the dis-

A-126

Affidavit of Leon H. Tykulsker Sworn to April 13, 1973

covery demands of plaintiffs. Plaintiffs’ cavalier approach

to such expenses is evidenced by their contention that

notice costs should be paid by the defendants because

they are better able to bear them. (Plaintiffs’ Moving

Affidavit, p. 15). Only after plaintiffs have adequately

established that there is a substantial likelihood that they

will prevail have some courts given this any considera-

tion at all.

17. In this connection, as shown in our memorandum of

law, courts have been concerned that costs should not be

paid in the first instance by defendants where there is

no showing that plaintiffs will be able to reimburse the

defendants in the event plaintiffs should not prevail. No

such showing of financial responsibility of the plaintiffs

has been made in this litigation.

18. Plaintiff's counsel also urges that cos

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