# Appendix — Oppenheimer Fund, Inc. v. Sanders > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_2467%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1978 - **Citation:** 437 U.S. 340 ## Text 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 11 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 iv 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 3-26-69 4-28-69 6— 2-69 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 10— 9-69 1024-69 11-13-69 11-13-69 11-19-69 11-19-69 11-21-69 11-24-69 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. 11 12 13 14 15 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. 21 3-30-73 4 4-73 4 6-73 4 6-73 4 6-73 4 6-73 4- 6-73 4-10-73 4-10-73 A4 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. 31 32 37 4/16/73 4-16-73 4-17-73 4-17-73 4-24-73 4-24-73 5- 4-73 5-21-73 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. 40 41 47 5-21-73 5-21-73: 5-21-73 5-23-73 6- 5-73 6— 5-73 6— 5-73 6— 8-73 6— 8-73 6-14-73 6-14-73 6-20-73 AS 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. 49 50 51 52 6-20-73 6-20-73 6-25-73 6-25-73 6-25-73 6-26-73 6-26-73 6-26-73 6-26-73 8-16-73 8-31-73 9- 6-73 9 6-73 A 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 7-24-74 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. 95 96 97 98 100 101 102 6-11-75 6-11-75 6-11-75 6-11-75 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 10-28-75 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 — 0. 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 10-31-75 10-31-75 11-24-75 12-10-75 12-29-75 1 9-76 1 9-76 1 9-76 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 6-30-76 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 10-22-76 10-22-76 10-22-76 622-77 622-77 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. (c) The transactions hereinafter alleged occurred in sub- 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; (c) Because of the possibility of the redemptions at 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- 42 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; (c) Declaring that the cause of action alleged in 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. (c) This action is not a collusive one to confer on the 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. (c) The shares of the Fund are offered for sale and sold 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 ; (c) The claims of the plaintiffs are typical of the claims 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. 2 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- A 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. (c) All material terms of the investment advisory 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, answ [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_2467%3A2. Public record. Not legal advice.