Third Avenue Focused Credit Fund
Sparer Law Group has filed the first class action lawsuit arising out of the collapse of Third Avenue's Focused Credit Fund. We are seeking to return to investors the hundreds of millions of dollars that were lost as a result of the false statements in the Fund's prospectuses that it would only invest a small amount in illiquid securities.
Liquidity is the fundamental promise that mutual funds make to their investors. This is the promise that the Third Avenue's Focused Credit Fund's manager and trustees broke. For years, the Fund's prospectuses and other SEC filings represented that it did not and would not hold more than 15% of its assets in illiquid securities. Those representations were false, and ultimately when investors attempted to redeem their shares, even the Fund was forced to acknowledge that its assets were illiquid.
That the Fund consistently exceeded its 15% limit on illiquid securities has been confirmed through independent analysis:
"At least one-fifth of Third Avenue's Focused Credit Fund, with less than $1 billion under management, was composed of illiquid assets, meaning they trade so infrequently that they don't have a market price, according to a Reuters analysis. That's one of the highest percentages of exposure in the junk bond sector.' -- Tim McLaughlin, Reuters, "Third Avenue Junk Fund Blowup Exposes Risks Of Unsellable Assets," December 12, 2015 (available at http://www.reuters.com/article/us-funds-bonds-risks-analysis-idUSKBN0TU0DK20151212).
This strategy should never have been offered in a mutual fund:
"The event also raises questions about whether Third Avenue's focus on extremely risky and difficult to trade assets was really appropriate given the fact that mutual funds promise investors the ability to take their money out whenever they wish. 'It is irresponsible to run the fund in such a way that they can't meet redemptions,' said Leo Acheson, an analyst at Morningstar." -- Matt Egan, CNN Money, "CEO Exits After Mutual Fund Implodes," December 14, 2015 (available at http://money.cnn.com/2015/12/11/investing/junk-bond-fund-blows-up-third-avenue/)
The recklessness of the Fund's manager and Trustees ultimately cost investors huge losses, as the Net Asset Value of Third Avenue's Focused Credit Fund plummeted by nearly 30 percent. By contrast, the high yield bond fund category generally only lost 4.2 percent over the same time period.
If you are an investor in the Third Avenue's Focused Credit Fund and would like to learn more about Sparer Law Group's first in the nation class action lawsuit, please contact Alan W. Sparer or Marc Haber at 415-217-7300 or email us at firstname.lastname@example.org.Sparer Law Group Files First Class Action Lawsuit Regarding Collapse of Third Avenue Focused Credit Fund Complaint for Violation of the Federal Securities Laws