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You must submit the settlement Proof form attached below, in order to participate in this settlement. There is a strict deadline of July 19, 2017 by which all claims must be submitted. The instructions for submitting are included in the Proof and the Notice files attached below for your download. DO NOT SEND THE FORMS TO THE SHAREHOLDERS FOUNDATION, INC.
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Lawsuit Overview
Settlement Overview
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April 6, 2017 - The court preliminarily approved the settlement.
March 31, 2017 - A stipulation of settlement was filed by the parties.
July 12, 2016 - An amended consolidated complaint was filed.
April 12, 2016 - The case was transferred to the U.S. District Court for the Southern District of New York.
January 27, 2016 - An investor in shares of Third Avenue Focused Credit Fund (NASDAQ: TFCIX and NASDAQ: TFCVX) filed a lawsuit in the U.S. District Court for the Central District of California over alleged violations of Federal Securities Laws by Third Avenue Focused Credit Fund in connection with certain allegedly false and misleading statements made between March 1, 2013 and December 10, 2015.
According to the complaint the plaintiff alleges on behalf of purchasers of Third Avenue Focused Credit Fund (NASDAQ: TFCIX) common shares between March 1, 2013 and December 10, 2015, that the defendants violated Federal Securities Laws.
More specifically, the plaintiff claims that in violation of the Securities Act of 1933, the prospectuses and registration statements of this fixed income mutual fund contained material false or misleading statements regarding the Fund's liquidity. The plaintiff says that a key feature of open-end funds is that they allow investors to redeem their shares daily and that funds therefore must maintain assets that are sufficiently liquid to meet shareholder redemptions. According to the lawsuit, the Third Avenue Focused Credit Fund promised investors that it would place no more than 15% of its assets in illiquid securities, securities that could not be sold promptly at or near its carrying value. However, the plaintiff claims that an analysis of the Fund's holdings in 2013, 2014, and 2015 has revealed that the Fund consistently held more than 15% of its net assets in illiquid securities and that the Fund's excessive illiquidity meant that it could not promptly sell assets to meet growing redemptions without unloading them at fire sale prices, leading it to suspend redemptions and shut down the Fund on December 10, 2015.
On December 9, 2015, Third Avenue Management, LLC, managers of Third Avenue Focused Credit Fund, announced to shareholders of their intent to halt all redemptions. Some analysts say that they had to stop redemptions to allow for an orderly liquidation. Following this news, on December 14, 2015, it was reported that the U.S. Securities and Exchange Commission (“SEC”) is looking into the circumstances of the liquidation freeze. The mutual fund invested in high yielding loans and securities issued by struggling companies. In a 2012 investor commentary a fund manager challenged the illiquidity “myth” of distress investing and reassured investors that keeping excess cash on hand and limiting assets to less than $3 billion would allow the fund to meet its financial obligations.
In July of 2014, the Third Avenue Focused Credit Fund reached $3.5 billion in assets, exceeding the limits set forth in the portfolio strategy. As investors began withdrawing their money the fund reportedly lost nearly 30% through December 9 of 2015.