UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933

Release No. 9329 / June 6, 2012

SECURITIES EXCHANGE ACT OF 1934

Release No. 67142 / June 6, 2012

INVESTMENT ADVISERS ACT OF 1940

Release No. 3417 / June 6, 2012

INVESTMENT COMPANY ACT OF 1940

Release No. 30099 / June 6, 2012

ADMINISTRATIVE PROCEEDING

File No. 3-14909

In the Matter of

OPPENHEIMERFUNDS, INC.

and

OPPENHEIMERFUNDS 

DISTRIBUTOR, INC.,

Respondents.

ORDER INSTITUTING 

ADMINISTRATIVE AND CEASE-ANDDESIST PROCEEDINGS PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933, SECTION 15(b)(4) OF THE 

SECURITIES EXCHANGE ACT OF 1934, 

SECTIONS 203(e) AND 203(k) OF THE 

INVESTMENT ADVISERS ACT OF 1940, 

AND SECTIONS 9(b) AND 9(f) OF THE 

INVESTMENT COMPANY ACT OF 1940, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASEAND-DESIST ORDER 

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted against OppenheimerFunds, Inc. (“OFI”) pursuant to Section 8A of the Securities Act of 

1933 (“Securities Act”), Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 

(“Advisers Act”), and Sections 9(b) and 9(f) of the Investment Company Act of 1940 (“Investment 

Company Act”) and against OppenheimerFunds Distributor, Inc. (“OFDI”) pursuant to Section 8A 

of the Securities Act and Section 15(b)(4) of the Securities Exchange Act of 1934 (“Exchange 

Act”). 

II.
2

In anticipation of the institution of these proceedings, OFI and OFDI (together, 

“Respondents”) have each submitted an Offer of Settlement (the “Offers”), which the Commission 

has determined to accept. Solely for the purpose of these proceedings and any other proceedings 

brought by or on behalf of the Commission, or to which the Commission is a party, and without 

admitting or denying the findings herein, except as to the Commission’s jurisdiction over them and 

the subject matter of these proceedings, which are admitted, Respondents consent to the entry of 

this Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of 

the Securities Act of 1933, Section 15(b)(4) of the Securities Exchange Act of 1934, Sections 

203(e) and 203(k) of the Investment Advisers Act of 1940, and Sections 9(b) and 9(f) of the 

Investment Company Act of 1940, Making Findings, and Imposing Remedial Sanctions and a 

Cease-and-Desist Order (“Order”), as set forth below. 

III.

On the basis of this Order and Respondents’ Offers, the Commission finds1 that:

Summary

1. These proceedings arise out of the offer and sale of shares of Oppenheimer 

Champion Income Fund and Oppenheimer Core Bond Fund (the “Funds”), two fixed income retail 

mutual funds managed by OppenheimerFunds, Inc. (“OFI”). In 2008, both Funds experienced 

losses far greater than those suffered by their peer funds, with Champion Income Fund’s share price 

declining nearly 80% (compared to an average decline of approximately 26% among its peers) and 

Core Bond Fund’s share price declining approximately 36% (compared to an average decline of 

approximately 4% among its peers). The Funds’ underperformance was driven primarily by their 

exposure to AAA-rated commercial mortgage-backed securities (“CMBS”).2

2. In late 2008, the CMBS market crashed, triggering large liabilities on the Funds’ 

TRS contracts and forcing the Funds, particularly Champion Income Fund, to sell large portions of 

their portfolio securities to meet those liabilities. In response, OFI senior management directed the

Funds’ portfolio managers to cut the Funds’ CMBS exposure, which they did. This action reduced 

the risk of further CMBS-induced losses, but it also constrained the Funds’ ability to recover lost 

value in the event of a CMBS market recovery. In responding to questions from financial advisers

(whose clients were the ultimate shareholders) and shareholders themselves, however, 

Respondents communicated that the Funds had only suffered paper losses, which, absent actual 

defaults, could be reversed when credit markets returned to normal. 

 They obtained that 

exposure mainly through derivative instruments known as total return swaps (“TRS contracts”), 

which created substantial leverage in both Funds. 

 

1 The findings herein are made pursuant to Respondents’ Offers of Settlement and are not binding 

on any other person or entity in this or any other proceeding.

2 As used in this Order, “CMBS” refers to the AAA-rated segment of the sector to which the Funds’ total 

return swap contracts were tied. 
3

3. In addition, throughout 2008, Respondents sold shares of the Champion Income 

Fund under a prospectus that highlighted the fund’s cash investments in junk bonds without 

adequately disclosing the fund’s practice of assuming substantial leverage through its use of 

derivatives. By offering and selling Champion Income shares under a misleading prospectus and 

making misleading statements in the midst of the Funds’ steep declines in late 2008, Respondents 

violated the federal securities laws, as set forth below. 

Respondents

4. OppenheimerFunds, Inc. (“OFI”), a Colorado corporation, has been registered as 

an investment adviser with the Commission at all relevant times. It has operations in New York 

City and Centennial, Colorado. As of February 2012, OFI provided investment advisory services

to approximately 100 investment companies, with approximately $177 billion in assets under 

management.

5. OppenheimerFunds Distributor, Inc. (“OFDI”), a New York corporation and 

wholly owned subsidiary of OFI, has been registered as a broker dealer with the Commission at all 

relevant times. OFDI markets and distributes shares of registered mutual funds managed by OFI. 

Other Relevant Entities

6. Oppenheimer Champion Income Fund (“Champion”) is an open-end 

management investment company (i.e., a mutual fund) registered with the Commission. At all 

relevant times, Respondents marketed Champion as a fund that invested primarily in high-yield, 

lower grade fixed income securities also known as “junk bonds.” 

7. Oppenheimer Core Bond Fund (“Core Bond”) is a series of Oppenheimer 

Integrity Funds, an open-end management investment company registered with the Commission.

At all relevant times, Respondents marketed Core Bond as an intermediate-term, investment 

grade bond fund. 

Background

The Funds’ Use of TRS Contracts

8. In 2007 and 2008, OFI employed a team of fixed income professionals, known as 

the “Core Plus Team,” to manage a number of taxable fixed income accounts, including the 

Funds. During the second half of 2007, the Core Plus Team came to believe that CMBS were 

undervalued in light of the recent and sudden widening of CMBS “spreads.”3

 

3 As used in this Order, “spread” refers to the difference between the yield on a bond and some baseline 

rate, such as the yield on Treasury bonds of like duration. A bond’s spread reflects the market’s 

perception of its credit risk—i.e., the wider the spread, the greater the perceived risk of default. 

 To take advantage 

of what they believed was an attractive opportunity, the team began adding CMBS exposure to 

the Funds in late 2007. 
4

9. Rather than investing directly in CMBS, however, the Core Plus Team increased 

the Funds’ CMBS exposure mainly by entering into TRS contracts with various counterparties. 

Each of these contracts specified, among other things, a contract duration, a “notional amount,” 

and a particular CMBS spread index, the movements of which dictated the parties’ payment 

obligations. Put simply, the Funds took a “long” position in CMBS (anticipating that CMBS 

spreads would tighten), while the counterparties on the contracts took a “short” position 

(anticipating that spreads would widen).4

10. Unlike purchases of actual CMBS, these TRS contracts required no initial 

commitment of cash; the Funds had to “pay” for their CMBS exposure only to the extent that 

CMBS spreads moved against their positions. This allowed the Funds to take on large amounts 

of CMBS exposure without having to liquidate other positions, but it also caused them to take on 

leverage by adding market exposure on top of the assets on their balance sheets. By March 31, 

2008, Champion had net assets of approximately $2 billion, but, through its TRS contracts, it had

additional exposure to approximately $1 billion of CMBS that it did not actually own. For its 

part, Core Bond had approximately $2.2 billion in net assets, plus additional exposure to 

approximately $800 million of CMBS through TRS contracts. 

 At the beginning of each month through the duration 

of the contract, the party against whom spreads had moved during the previous month (the 

Funds, if spreads widened) would be required to make a cash payment to the other party based 

on the size of the spread change (as measured by the referenced index) and the “notional 

amount” of the contract. 

Fourth Quarter Spread Widening Drives Down Performance

11. Between mid-September and early November 2008, CMBS spreads widened to 

unprecedented levels, triggering substantial month-end payment obligations for the Funds on 

their TRS contracts. Meanwhile, market values for the Funds’ portfolio securities also fell, 

further driving down the Funds’ per share net asset values (“NAV”). Between September 14 and 

November 10, 2008, Champion’s NAV fell approximately 50%, while Core Bond’s fell more 

than 20%. Making matters worse, both Funds had to raise cash for anticipated TRS contract

payments by selling depressed bonds into an increasingly illiquid market. 

12. As the value of the Funds’ assets fell, the notional amounts of their TRS contracts

remained constant, meaning that their relative exposure to CMBS (as compared to other fixed 

income sectors) actually increased. This was especially true in Champion. By mid-October 

2008, Champion’s net assets had fallen to approximately $1 billion, about half the fund’s size in 

March. But the fund still had approximately $1 billion worth of additional CMBS exposure 

through TRS contracts, meaning that CMBS represented a far larger position for the fund, 

relative to other sectors, than it had six months earlier, even though the notional size of the 

position had not changed. 

The Core Plus Team Cuts CMBS Exposure as CMBS Spreads Widen To New Levels

 

4 The counterparties also agreed to pay a monthly “carry amount,” akin to a bond coupon payment, which 

could be offset by any amount owed by the Funds due to the widening of CMBS spreads. 
5

13. In late 2008, the combination of increased CMBS volatility and heightened 

CMBS exposure caused both Funds’ risk levels (as measured by OFI) to exceed certain limits set 

forth in OFI’s internal risk management guidelines. Because the Core Plus Team was reluctant

to “lock in losses” on their TRS contracts and believed that the CMBS market would rebound, 

OFI initially allowed the Funds to maintain their elevated risk levels. On or about November 12, 

however, OFI senior management directed the Core Plus Team to bring the Funds back into 

compliance with the firm’s internal risk management guidelines. Within the next two days, the 

team developed a CMBS risk-reduction plan that set new, lower CMBS exposure targets for both 

Funds. Champion’s new target required the fund to reduce its then-current CMBS exposure by 

more than half. 

14. The Core Plus Team began executing its CMBS risk-reduction plan immediately, 

entering into hedging positions that offset a portion of the Funds’ exposure on November 14. 

Just as the team began attempting to trim risk, however, the CMBS market’s collapse accelerated

over the course of the following week, creating staggering liabilities for Champion and, to a 

lesser extent, Core Bond on their TRS contracts and driving their NAVs still lower. In the eight 

days between November 12 and November 20, 2008, Champion’s NAV fell approximately 60%, 

while Core Bond’s NAV fell approximately 27%. 

15. To raise cash for anticipated TRS contract payments, the Funds had no choice but 

to sell more of their portfolio securities. This task became increasingly difficult for Champion 

due to the size of its projected TRS contract payments and poor liquidity in the high-yield bond 

market. By November 19, Champion’s anticipated TRS contract payments for November (based 

on then-current CMBS spread levels) totaled approximately one-third of the fund’s net assets and 

almost twice the fund’s then-available cash. The situation worsened over the next two days, 

prompting concerns within OFI about the fund’s near-term solvency. On November 21, OFI 

invested $150 million in Champion to provide the fund with additional liquidity, and over the 

next two weeks, the Funds continued to reduce their CMBS exposure to avoid further losses and 

reduce risk. By December 5, just three weeks after the Core Plus Team was instructed to reduce 

risk, the team had reduced Champion’s net notional CMBS exposure by approximately 80% and 

Core Bond’s net notional CMBS exposure by more than 40%. 

Respondents Make Misleading Statements Amidst the Dramatic NAV Declines of 

November 2008

16. Champion and Core Bond were marketed and sold by OFDI sales personnel 

called “wholesalers” to independent financial advisers, who, in turn, made recommendations to, 

and purchased shares on behalf of, or at the direction of, their own clients. As CMBS spreadwidening adversely affected the Funds in late 2008, many advisers and shareholders raised

questions about the Funds’ performance and the outlook ahead. Respondents addressed these 

questions through a variety of means. In some instances, they provided information to 

wholesalers, who, in turn, relied on that information in their own communications with financial 

advisers. In other instances, Respondents provided information directly to financial advisers, 

both orally and in writing. In one instance, they provided OFDI call center representatives with a 

set of talking points, which the representatives used to respond to questions from shareholders. 

As set forth in paragraphs 17 through 20 below, these communications advanced materially 
6

misleading messages, including that the Funds had only suffered paper losses, not “permanent 

impairments”; that the Funds’ holdings and strategies remained intact; and that, absent actual 

defaults, shareholders could continue to “collect [their] coupon” on the Funds’ bonds as they waited 

for the market prices of those bonds to recover.

17. A November 14 email intended to help wholesalers answer questions from 

financial advisers misleadingly stressed, for example, that “[w]e still believe [CMBS] represent 

tremendous value,” that their “total return potential” had only been “magnified” by recent spread 

widening, that “these securities are NOT permanently impaired,” and that “you are collecting 

your coupon as you wait for the credit markets to come back.” A November 19 Q&A document 

prepared for financial advisers repeated essentially the same message, as did a set of talking 

points utilized by OFDI telephone representatives beginning on or about November 20. The 

talking points also indicated that the Funds were finding that recent market volatility had created 

“opportunities” for the Funds to earn higher yields on lower-risk bonds. In fact, at the time of 

these communications, the Funds were committed to reducing their CMBS exposure and were 

being forced to sell bonds to raise cash for anticipated TRS contract payments, thereby realizing 

investment losses and forfeiting future income streams on those bonds. 

18. During a November 19 conference call with financial advisers, OFI similarly 

emphasized that the Funds had suffered no “permanent impairments” other than a small amount 

of exposure related to Lehman Brothers. Responding to questions about Champion’s ability to 

handle redemptions, the representative went on to say that the fund had “pretty significant cash . 

. . to meet redemptions,” and that “we’ve got nine-and-a-half percent of the fund in cash, so 

we’re not fire selling anything.” In fact, the fund had a sizeable cash position only because it 

had been selling depressed bonds to fund anticipated TRS contract payments, and the fund’s cash 

position was inadequate to cover those projected payments, much less any redemptions the fund 

might face. 

19. A set of talking points circulated on November 25 for wholesalers to use in 

communications with financial advisers also implied that the Funds remained as committed as 

ever to their CMBS positions and, therefore, that the Funds could still recover their CMBSinduced losses if the CMBS market recovered: 

Can the Funds make back the performance it has [sic] lost over the past 6 months? 

The funds are constantly changing to reflect the best opportunities in the market 

currently. Obviously, recent performance has been tightly linked to CMBS such 

that the real question is ‘can CMBS come back’? We believe we have made a 

rational investment case for CMBS but only time will allow our investment thesis 

to be tested. 

(Emphasis added). In fact, the Funds were committed to reducing their CMBS exposure and had 

been doing so for nearly two weeks. And given how much Champion in particular was reducing 

that exposure, the fund had no realistic prospects for recovering all of its CMBS-induced losses, 

even if CMBS recovered completely. 
7

20. In conference calls with wholesalers on November 26 and financial advisers on 

December 9, OFI disclosed that the Funds were reducing CMBS exposure, but stated that they 

were simply returning to the exposure targets that had been in place all year. In fact, the Funds’ 

new targets were materially lower than their old targets. In addition, OFI downplayed the 

significance of the decision to cut the Funds’ CMBS exposure, suggesting that, if CMBS spreads 

were to tighten going forward, the Funds could still make back all of their CMBS losses even 

with reduced exposure. In fact, the Funds’ new targets made it highly unlikely that they would 

recover those losses in the foreseeable future. This was particularly true in Champion, which 

was poised to move forward with less than half the CMBS exposure it had during the period

when it incurred its largest CMBS losses. 

Champion’s Misleading Prospectus

21. CMBS was, by far, the worst-performing sector to which Champion had 

investment exposure in 2008: the index to which most of the Funds’ TRS positions were tied 

experienced a total return of approximately -37% for the year. Meanwhile, high-yield bonds, 

which represented the bulk of Champion’s portfolio securities, returned an average of 

approximately -26%. Champion shareholders, however, saw the value of their fund shares fall 

nearly 80%, far more than any sector in which the fund invested. This occurred because 

Champion was substantially leveraged as a result of its use of derivatives, particularly TRS 

contracts. 

22. For most of 2008, Respondents offered shares of Champion under a prospectus 

dated January 28, 2008 (the “Champion Prospectus”). OFI created the Champion Prospectus, 

caused it to be filed with the Commission, and caused OFDI to offer fund shares pursuant to it. 

As described below, the Champion Prospectus was materially misleading insofar as it purported 

to describe the fund’s “main” investments without adequately disclosing the fund’s practice of 

assuming substantial leverage on top of those investments. 

23. In its discussion of the Fund’s “Investment Objective and Principal Investment 

Strategies,” the Champion Prospectus stated: 

WHAT DOES THE FUND MAINLY INVEST IN? The Fund invests in a variety of 

high-yield, fixed-income securities and related instruments. These investments primarily 

include: 

• Lower-grade corporate bonds. 

• Foreign corporate and government bonds. 

• Swaps, including single name and index-linked credit default swaps. 

Under normal market conditions, the Fund invests at least 60% of its total assets in highyield, lower grade, fixed-income securities, commonly called “junk” bonds . . . . 
8

The remainder of the Fund’s assets may be invested in other debt securities, common 

stocks (and other equity securities), or cash or cash equivalents when the Manager 

believes these investments are consistent with the Fund’s objectives.

The Fund may invest in securities of foreign issuers. The Fund currently focuses on debt 

securities of foreign issuers in developed markets. The Fund also uses certain derivative 

investments to try to enhance income or to try to manage investment risk. 

**** 

WHO IS THE FUND DESIGNED FOR? The Fund is designed primarily for investors 

seeking high current income from a fund that invests primarily in lower-grade domestic 

and foreign fixed-income securities. Those investors should be willing to assume the 

greater risks of short-term share price fluctuations and the special credit risks that are 

typical for a fund that invests mainly in lower-grade domestic and foreign fixed-income 

securities . . . . 

(Emphasis added). 

24. This disclosure indicated that Champion’s investment returns would mainly be a 

function of the fund’s investments in high-yield bonds (and, to a lesser extent, investments in 

other debt securities, equity securities, and cash and cash equivalents). In fact, while Champion 

did invest more than 80% of its net assets in corporate bonds throughout 2008, it also took on 

significant leverage through TRS contracts that gave it substantial exposure to the CMBS market 

without requiring any investment of fund assets. By the end of March 2008, Champion, as a 

result of its TRS contracts, had exposure to $1 billion worth of CMBS, approximately half the 

value of the fund’s net assets. By mid-October 2008, the fund’s CMBS exposure was roughly 

equal to the value of its net assets. 

25. The Champion Prospectus did not adequately disclose to investors that they could 

be exposed to such substantial leverage. The prospectus disclosed that the fund “invested” in 

“swaps” and other derivatives “to try to enhance income or to try to manage investment risk” and 

that derivatives “can increase the volatility of the Fund’s share prices.” But it did not adequately 

disclose that Champion could use derivatives to such an extent that the fund’s total investment 

exposure could far exceed the value of its portfolio securities and its investment returns could 

depend primarily upon the performance of bonds that it did not own. Nor did the prospectus 

adequately convey to investors the heightened risk of loss associated with the fund’s use of 

leverage. The omission of such disclosure rendered the Champion Prospectus’s statements about 

the fund’s “main” investments materially misleading. 

OFI’s Fees

26. As a result of the misleading Champion Prospectus and Respondents’ misleading 

statements in the midst of the Funds’ steep NAV declines in late 2008, the Funds were able to 

retain existing shareholders and attract new ones. OFI received a benefit from those investments 

in the form of management fees paid by the Funds. Between February 1 and December 31, 

2008, OFI received management fees totaling $9,278,416 from Champion. For the second half 
9

of November and December 2008, OFI received management fees totaling $601,290 from Core 

Bond. 

Violations

27. Champion Prospectus. By making misleading statements in the Champion 

Prospectus and causing it to be filed with the Commission, OFI willfully5

28. Misleading Statements in Midst of NAV Declines. By disseminating misleading 

statements about the Funds in the midst of their precipitous NAV declines in late 2008, both OFI 

and OFDI willfully violated Section 17(a)(2) of the Securities Act as well as Section 17(a)(3) of 

the Securities Act, which makes it unlawful for any person, in the offer or sale of a security, to 

engage in any transaction, practice, or course of business that operates or would operate as a 

fraud or deceit. As a result of that same conduct, OFI also willfully violated Section 206(4) of 

the Advisers Act and Rule 206(4)-8(a)(1) and (2) thereunder. Section 206(4) makes it unlawful 

for any investment adviser to engage in any act, practice, or course of conduct that is fraudulent, 

deceptive, or manipulative, as prescribed by Commission rules. Rule 206(4)-8(a)(1) and (2) 

prohibit an investment adviser to a pooled investment vehicle from (1) making any materially 

false or misleading statement to any investor or prospective investor in the pooled investment 

vehicle or (2) otherwise engaging in any act, practice, or course of business that is fraudulent, 

deceptive, or manipulative with respect to any investor or prospective investor in the pooled 

investment vehicle. 

 violated Section 34(b) 

of the Investment Company Act, which makes it unlawful for any person to make any materially 

false or misleading statement of fact in a fund document filed with the Commission. By 

obtaining money in the offer or sale of Champion shares by means of the misleading prospectus, 

both OFI and OFDI willfully violated Section 17(a)(2) of the Securities Act, which makes it 

unlawful for any person, directly or indirectly, in the offer or sale of a security, to obtain money 

or property by means of any materially false statement or materially misleading omission. 

Respondents’ Cooperation and Remedial Efforts

29. In determining to accept the Offers, the Commission considered cooperation 

afforded the Commission staff and remedial acts promptly undertaken by Respondents, including 

the replacement of senior management and portfolio management personnel, enhancements to 

OFI’s risk management structure, enhancements to OFI’s Legal Department capabilities, and the 

implementation of new controls and procedures relating to fund disclosures and marketing 

communications. 

Undertakings

 

5 A willful violation of the securities laws means merely “‘that the person charged with the duty knows 

what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 

F.2d 969, 977 (D.C. Cir. 1949)). There is no requirement that the actor “‘also be aware that he is 

violating one of the Rules or Acts.’” Id. (quoting Gearhart & Otis, Inc. v. SEC, 348 F.2d 798, 803 (D.C. 

Cir. 1965)). 
10

30. Ongoing Cooperation. Respondents undertake to cooperate fully with the 

Commission in any and all investigations, litigations or other proceedings relating to or arising 

from the matters described in this Order or involving, directly or indirectly, the Funds. In 

connection with such cooperation, Respondents: 

a. Shall produce, without service of a notice or subpoena, any and all 

documents and other information reasonably requested by the Commission’s staff, or by 

an administrator to be appointed pursuant to the Order, with a custodian declaration as to 

their authenticity, if requested; 

b. Shall use their best efforts to cause their officers, directors, employees, 

and former employees to be interviewed by the Commission’s staff at such times and 

places as the staff reasonably may direct. 

c. Shall use their best efforts to cause their officers, employees, and directors 

to appear and testify truthfully and completely without service of a notice or subpoena in 

such investigations, depositions, hearings or trials as may be requested by the 

Commission’s staff; 

d. Agree that requests for interviews and notices or subpoenas for testimony 

by Respondents’ officers, employees, or directors may be delivered by regular mail, fax, 

or electronic mail to Catherine Botticelli, Esq., Dechert LLP, 1775 I Street, Washington, 

DC 20006. 

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Respondents’ Offers. 

Accordingly, pursuant to Section 8A of the Securities Act, Section 15(b)(4) of the 

Exchange Act, Sections 203(e) and 203(k) of the Advisers Act, and Sections 9(b) and 9(f) of the 

Investment Company Act, it is hereby ORDERED that:

A. Respondent OFI cease and desist from committing or causing any violations and any 

future violations of Section 17(a)(2) and (3) of the Securities Act, Section 206(4) of the Advisers 

Act and Rule 206(4)-8(a)(1) and (2) thereunder, and Section 34(b) of the Investment Company Act. 

B. Respondent OFDI cease and desist from committing or causing any violations and 

any future violations of Sections 17(a)(2) and (3) of the Securities Act. 

C. Respondents OFI and OFDI are censured. 

D. Respondent OFI shall, within 10 days of the entry of this Order, pay disgorgement 

of $9,879,706, prejudgment interest of $1,487,190, and a civil money penalty of $24,000,000 to 

the Securities and Exchange Commission. If timely payment of disgorgement is not made, 

additional interest shall accrue pursuant to SEC Rule of Practice 600. If timely payment of penalty 

is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. Payment shall be: (A) 
11

made by wire transfer, United States postal money order, certified check, bank cashier’s check or 

bank money order; (B) made payable to the Securities and Exchange Commission; (C) handdelivered or mailed to the Securities and Exchange Commission, Office of Financial 

Management, 100 F St., NE, Stop 6042, Washington, DC 20549; and (D) submitted under cover 

letter that identifies OFI as a Respondent in these proceedings, the file number of these 

proceedings, copies of which cover letter and money order or check shall be sent to Julie K. Lutz, 

Associate Director, Mary S. Brady, Assistant Director, and Coates Lear, Staff Attorney, Denver 

Regional Office, Division of Enforcement, Securities and Exchange Commission, 1801 California 

St., Suite 1500, Denver, CO 80202. 

E. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, a Fair 

Fund is created for the disgorgement, interest, and penalty referenced in paragraph D above. 

Regardless of whether any such Fair Fund distribution is made, amounts ordered to be paid as civil 

money penalties pursuant to this Order shall be treated as penalties paid to the government for all 

purposes, including all tax purposes. To preserve the deterrent effect of the civil penalty, OFI 

agrees that in any Related Investor Action, it shall not argue that it is entitled to, nor shall it benefit 

by, offset or reduction of any award of compensatory damages by the amount of any part of OFI’s 

payment of a civil penalty in this action (“Penalty Offset”). If the court in any Related Investor 

Action grants such a Penalty Offset, OFI agrees that it shall, within 30 days after entry of a final 

order granting the Penalty Offset, notify the Commission’s counsel in this action and pay the 

amount of the Penalty Offset to the United States Treasury or to a Fair Fund, as the Commission 

directs. Such a payment shall not be deemed an additional civil penalty and shall not be deemed to 

change the amount of the civil penalty imposed in this proceeding. For purposes of this paragraph, 

a “Related Investor Action” means a private damages action brought against OFI by or on behalf of 

one or more investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding.

F. The disgorgement, interest, civil penalties, and any other funds which may be paid 

to the Fair Fund through or as the result of related actions, if any, shall be aggregated in the Fair 

Fund, which shall be maintained in the type of account directed by Commission staff. The 

Commission will appoint a Fund Administrator who will develop a distribution plan (the “Plan”) 

and administer the Plan in accordance with the Commission Rules on Fair Fund and Disgorgement 

Plans. The Fair Fund shall be used to compensate injured customers for any losses resulting from 

the violations determined herein and to cover the costs of administration of the Fair Fund. Any 

amount remaining in the Fair Fund after all distributions have been made and costs have been paid 

shall be transmitted to the Commission for transfer to the U.S. Treasury. Under no circumstances 

shall any part of the Fair Fund be returned to OFI. 

By the Commission.

Elizabeth M. Murphy

Secretary