OppenheimerFunds Inc. said Tuesday it will pay the state of Illinois $77 million to settle an investigation into the firm's management of a college savings program.
Oppenheimer spokeswoman Jeaneen Pisarra said the firm has also reached a tentative $67 million settlement with New Mexico. The firm is in talks with Maine, Nebraska and Texas.
Last month, OppenheimerFunds agreed to pay $20 million to settle a lawsuit filed by the state of Oregon.
The settlements stem from an underlying fund in the states' 529 college saving programs. Oppenheimer had marketed that fund, Core Plus, as a conservative investment for students who were at or near college age, according to Illinois Attorney General Lisa Madigan's office.
However, the fund experienced steep losses last year because it contained risky investments and was highly leveraged, according to Madigan's office. The management team in charge of the fund is no longer with Oppenheimer.
The Illinois settlement specifies that all $77.2 million will be distributed to participants of Bright Start, the state's 529 savings program. Oppenheimer will pay additional costs associated with administering the settlement.
In a release, OppenheimerFunds maintained that it "acted lawfully and in good faith in managing the investments in the Bright Start program."
Those covered in the Illinois settlement are Bright Start participants who had portfolios exposed to the Core Plus fund between Jan. 1, 2008, and Jan. 25 of this year. Eligible participants will receive release forms early next year, Madigan's office said.