Opp Complaint Final 03-26-2012

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

BROCKTON RETIREMENT BOARD, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. OPPENHEIMER GLOBAL RESOURCE PRIVATE EQUITY FUND I, L.P., OPPENHEIMER ASSET MANAGEMENT, INC., OPPENHEIMER ALTERNATIVE INVESTMENT MANAGEMENT, LLC, OPPENHEIMER & CO. INC., BRIAN WILLIAMSON, and PATRICK KANE. Defendants.

No. ___________________________ CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS JURY TRIAL DEMANDED

INTRODUCTION

Plaintiff Brockton Retirement Board (“Brockton” or “Plaintiff”), by its undersigned

attorneys, alleges upon personal knowledge as to Plaintiff’s own acts, and upon information and

belief as to all other matters, based on the investigation conducted by and through Plaintiff’s

counsel, which included, among other things, a review of the Defendants’ documents and

announcements issued in connection with the private placement of limited partnership interests

in Oppenheimer Global Resource Private Equity Fund I, L.P. (“OGR Fund”), wire and press

releases published by and regarding the OGR Fund, and advisories about the OGR Fund, and

other information readily obtainable in the public domain.

2

I. NATURE OF THE ACTION

1. This is a class action brought on behalf of investors who purchased interests in a

private placement of unregistered limited partnership units pursuant to the OGR Fund’s private

placement memorandum dated July 2008 (the “OGR PPM”) that was actively used by the OGR

Fund to solicit investors. The OGR Fund is a limited partnership functioning as an investment

fund of funds designed to make global investments in natural resource-related companies.

Specifically, as described by the OGR PPM, the OGR Fund is:

[A] fund of private equity funds that intends to invest in natural resource, power generation and energy-related assets and their changing dynamics (collectively, “Natural Resource and Related Assets”) on a global basis including but not limited to energy, timber, water, minerals, mined resources, agriculture and the transportation, distribution, utilization, management and support of, and technologies being developed for, Natural Resource and Related Assets, and including, but not limited to, assets relating to the protection, renewal or replacement of environmentally protected or sensitive areas or wildlife such as wetlands and endangered species and their habitats. 2. In addition to the OGR PPM, Defendants solicited investors pursuant to a Request

for Information and other materials circulated to investors between 2008 and 2010 (collectively,

with the OGR PPM, the “Solicitation Documents”).

3. The Solicitation Documents contained materially untrue and misleading

statements regarding: (i) the purported value of the OGR Fund’s holdings, (ii) the profitability

and performance of the OGR Fund, and (iii) the policies and procedures to be used by the OGR

Fund in conducting due diligence into the performance and valuation of its assets. Specifically,

the Solicitation Documents overstated the value of the OGR Fund’s holdings as well as the OGR

Fund’s profitability and financial performance due to a failure of the OGR Fund’s procedures

and in violation of applicable laws and standards.

3

4. As a result of Defendants’ misleading statements, Plaintiff and other members of

the Class have suffered significant damages.

II. JURISDICTION AND VENUE

5. The claims alleged herein arise under Sections 12(a)(2) and 15 of the Securities

Act of 1933 (the “Securities Act”), 15 U.S.C. §§ 77l(a)(2) and 77o, and the rules and regulations

of the Securities and Exchange Commission (“SEC”) promulgated thereunder.

6. This Court has jurisdiction over the subject matter of this action pursuant to

Section 22(a) of the Securities Act, 15 U.S.C. § 77v(a).

7. Venue is proper in this District pursuant to Section 22(a) of the Securities Act, 15

U.S.C. § 77v(a) and 28 U.S.C. § 1391(d).

8. In connection with the acts alleged in this complaint, Defendants, directly or

indirectly, used the means and instrumentalities of interstate commerce, including, but not

limited to, the United States mails, interstate electronic communications, interstate telephone

communications and the facilities of the national securities markets.

III. PARTIES

9. Plaintiff Brockton Retirement Board is a public retirement system representing

current and former employees of the City of Brockton, Massachusetts. Brockton invested in the

OGR Fund as set forth in the accompanying certification, incorporated by reference herein, and

has been damaged thereby. Defendants solicited Brockton to make its investment in the OGR

Fund in the Commonwealth of Massachusetts.

10. Defendant OGR Fund is a Delaware limited partnership with its principal place of

business located in New York, New York.

4

11. Defendant Oppenheimer Asset Management, Inc. (“OAM”) is a New York

corporation with its principal place of business in New York, New York. OAM is the OGR

Fund’s Sponsor and an SEC registered investment advisor.

12. Defendant Oppenheimer Alternative Investment Management, LLC (“AIM”) is a

Delaware limited liability company with its principal place of business located in New York,

New York. AIM is the OGR Fund’s General Partner, an affiliate of OAM and an SEC registered

investment advisor.

13. Defendant Oppenheimer & Co. Inc. (“Opco”) is a New York corporation with its

principal place of business in New York, New York. Opco served as the administrator for the

OGR Fund, is a broker dealer and an SEC registered investment advisor.

14. Defendant Brian Williamson (“Williamson”) was at all relevant times an

Executive Officer and Managing Director of the OGR Fund. Defendant Williamson actively

solicited investors to invest in the OGR Fund in the Commonwealth of Massachusetts.

15. Defendant Patrick Kane (“Kane”) was an Executive Officer and Senior Managing

Director of the OGR Fund and signatory to SEC filings of the Company. Defendant Kane

actively solicited investors to invest in the OGR Fund

16. Defendants OGR Fund, OAM, AIM, and Opco are collectively referred to herein

as the “Corporate Defendants.” Defendants Williamson and Kane are collectively referred to

herein as the “Individual Defendants.” The Corporate Defendants and the Individual Defendants

are collectively referred to herein as “Defendants.”

5

IV. FACTUAL ALLEGATIONS

A. Background

17. The Corporate Defendants are wholly-owned subsidiaries of Oppenheimer

Holdings Inc., a publicly-traded investment bank and full-service investment firm. Oppenheimer

Holdings Inc. holds client assets of approximately $76 billion and operates throughout the United

States and Latin America.

18. The OGR Fund was established as fund of private equity funds designed to invest

in companies focused on natural resources. The OGR Fund’s stated investment objective is “to

provide income and long-term capital appreciation by investing in a diversified portfolio of

select private equity and equity-related investments within developed and developing market

countries managed by experienced teams capable of generating superior returns.”

19. Established as a limited partnership in 2007, Opco began to raise initial capital in

the OGR Fund in April 2008. The OGR Fund offered accredited investors the opportunity to

subscribe for limited partnership interests denominated in either Class A or Class B Units.

Solicitation of investors began on or about April 2008. The goal of the OGR Fund was to raise

approximately $200 million in aggregate commitments. Between April 2008 and April 2010, the

OGR Fund raised approximately $85 million and total investment to date in the fund is estimated

at $140 million.

20. The OGR Fund’s general partner, AIM, set the minimum investment for Class A

Units at $500,000 and the minimum investment for Class B Units at $5,000,000. Plaintiff

Brockton invested $5 million into the OGR Fund by March of 2010. Thus far, at least $3.2

million of Brockton’s investment has been drawn upon by AIM through capital calls.

6

B. Defendants’ Materially Untrue and Misleading Statements

21. The OGR PPM states that Defendants performed substantial due diligence on the

OGR Fund’s investments. Specifically, the OGR PPM made the following materially untrue

statement:

Our due diligence review considers the prospective fund’s due diligence process, information gathering, deal evaluation, peer review and parameters or metrics for investment approval. We also consider deal team diversity, length of time from identification to letter of intent and commitment restraint. The next level of review in our due diligence process assesses a fund’s investment contingency planning…[i]n analyzing a prospective fund, we will inquire about specific investments and whether a contingency plan was in existence for creating value at the time the deal was consummated. 22. The OGR Fund’s audited financial statements show that as of December 31, 2008,

41.3% of the OGR Fund’s capital was invested in the private equity fund Cartesian Investors-A,

L.P. (“Cartesian”). The Solicitation Documents place the percentage of committed capital in

Cartesian at approximately 44.7%.

23. Cartesian is one of many private equity funds run by Cartesian Capital Group,

LLC (“CCG”), a private equity firm holding global investments.

24. Opco has received compensation from Cartesian for its role as a sales agent in

other funds controlled by CCG, a material fact not disclosed in the Solicitation Documents.

25. The assets of Cartesian consisted solely of shares in S.C. Fondul Proprietatea SA

(“Fondul”), a Romanian investment fund publicly-traded on the Bursa de Valori Bucuresti

(“BvB”), commonly known as the Romanian Stock Exchange.

26. Fondul was created in 2005 by the Romanian government to compensate its

citizens whose property had been unlawfully seized or otherwise misappropriated by the former

Communist government of Romania.

7

27. In the Solicitation Documents, the stated internal rate of return (“IRR”) of the

OGR Fund’s investment in Cartesian was 67.0%, while the overall IRR was listed as 38.3%.

28. Defendants achieved these dramatic positive IRRs for Cartesian and the OGR

Fund by improperly inflating the value of the Cartesian investment.

29. On June 30, 2009, shares of Fondul, Cartesian’s sole asset, was trading at the

equivalent of $0.07 per share on the BvB. Rather than use the then current public market trading

price of the Fondul shares when valuing the Company’s investment in Cartesian (as Defendants

represented they did), Defendants instead assigned an inflated value of not less than $0.33 cents

per share.

30. This over-valuation allowed Defendants to value the OGR Fund’s investment in

Cartesian at approximately $9.3 million even though the investment value was actually less than

$2 million based on the actual Fondul trading price. As a result, the Defendants advertised an

IRR for the OGR Fund of 38.3% in the Solicitation Documents. A proper valuation of the

Cartesian investment would show that the OGR Fund actually experienced a negative IRR or a

loss of between 10.6% and 6.3%.

31. In the OGR PPM, Defendants state that the General Partner “will value the assets

of the [OGR] Fund based upon available relevant information. The General Partner expects that

in most cases it will value the Underlying Funds in accordance with the valuations reported to it

by the Managers of the Underlying Funds.”

32. Moreover, Defendants explicitly stated in the Solicitation Documents that the

OGR Fund would apply FASB 157: “[a]s a fund of funds, we require our underlying fund

managers to utilize third party valuation firms that provide valuations of the respective portfolios

in accordance with FASB 157.”

8

33. Specifically, FASB 157 states that a “quoted price in an active market provides

the most reliable evidence of fair value and shall be used to measure fair value whenever

available.” Under FASB 157, Cartesian should have been valued using the current market price

of its sole asset, the Fondul shares, which were trading at the equivalent of $0.07 per share.

34. Defendants instead negligently valued the Cartesian investment at multiples of its

trading price on the open market, in direct violation of SEC and Financial Accounting Standards

Board (“FASB”) rules.

35. Plaintiff and the Class invested in the OGR Fund based on this negligently

inflated IRR, causing them to suffer the damages complained of herein.

C. Government Investigations

36. A February 24, 2012 article in THE WALL STREET JOURNAL reported that the

United States Attorney’s Office for the District of Massachusetts, the SEC and the Massachusetts

Attorney General’s Office have been investigating the OGR Fund since the fall of 2011, sending

multiple subpoenas to the OGR Fund’s employees and to OAM. The investigations have

focused on whether the OGR Fund has been incorrectly accounting for its investments.

37. Oppenheimer Holding Inc.’s SEC Form 10-K, filed March 6, 2012, states that it

has been responding to information requests from the SEC and the Massachusetts Attorney

General’s Office since October 2011 regarding the OGR Fund and that on February 24, 2012 the

United States Attorney’s Office for Massachusetts (Boston) informed Oppenheimer Holdings

Inc. and OAM that it intends to seek information regarding the OGR Fund.

9

V. CLASS ACTION ALLEGATIONS

38. Plaintiff brings this action as a class action under the Securities Act pursuant to

Federal Rules of Civil Procedure 23(a) and (b)(3) on behalf of investors who purchased the

interests in the OGR Fund pursuant to the Solicitation Documents.

39. The members of the Class are located in geographically diverse areas and are so

numerous that joinder of all members is impracticable. Although the exact number of Class

members is unknown at this time and can only be ascertained through appropriate discovery,

Plaintiff believes there are hundreds of members of the Class who invested in the OGR Fund.

40. Common questions of law and fact exist as to all members of the Class and

predominate over any questions affecting solely individual members of the Class. Among the

questions of law and fact common to the Class are:

(a) whether Defendants violated the federal securities laws based upon the facts alleged herein;

(b) whether the Solicitation Documents contained untrue statements of material facts

about the OGR Fund and the value of its assets;

(d) whether Defendants performed appropriate due diligence in advance of soliciting the relevant partnership interests in the OGR Fund; and

(e) the proper measure of damages.

41. Plaintiff’s claims are typical of the claims of the members of the Class as Plaintiff

and members of the Class sustained damages arising out of the untrue statements contained in

the Solicitation Documents in violation of federal law as complained of herein.

42. Plaintiff will fairly and adequately protect the interests of the members of the

Class and has retained counsel competent and experienced in class and securities litigation.

Plaintiff has no interests antagonistic to, or in conflict with, those of the Class.

10

43. A class action is superior to alternative methods for the fair and efficient

adjudication of this controversy since joinder of all members of this Class is impractical.

Furthermore, because the damages suffered by some individual Class members may be relatively

small, the expense and burden of individual litigation make it impossible for the Class members

individually to redress the wrongs done to them. There will be no difficulty in the management

of this action as a class action.

VI. NO SAFE HARBOR

44. The statutory safe harbor under the Private Securities Litigation Reform Act of

1995, which applies to forward-looking statements under certain circumstances, does not apply

to any of the allegedly untrue and misleading statements plead in this complaint. The statements

alleged to be untrue and misleading herein all relate to then-existing facts and conditions. In

addition, to the extent certain of the statements alleged to be false may be characterized as

forward-looking, they were not adequately identified as “forward-looking statements” when

made, and there were no meaningful cautionary statements identifying important factors that

could cause actual results to differ materially from those in the purportedly forward-looking

statements.

COUNT I (Against All Defendants)

Violations of Section 12(a)(2) of the Securities Act

45. Plaintiff repeats and re-alleges each of the allegations set forth above as if fully

set forth herein. This Count is asserted against the Defendants for violations of Section 12(a)(2)

of the Securities Act, 15 U.S.C. § 77l(a)(2), on behalf of all members of the Class who purchased

or otherwise invested in the OGR Fund pursuant to the Solicitation Documents.

11

46. Defendants were sellers, offerors, and/or solicitors of sales of securities offered

pursuant to the Solicitation Documents. Defendants actively solicited investment in the OGR

Fund offered pursuant to the Solicitation Documents. The Solicitation Documents contained

untrue statements of material fact and omitted other facts necessary to make the statements not

misleading, and failed to disclose material facts, as set forth above.

47. Plaintiff and other members of the Class who purchased or otherwise acquired

investment in the OGR Fund pursuant to the materially untrue and misleading Solicitation

Documents did not know and in the exercise of reasonable diligence could not have known of the

untrue statements and omissions contained in the Solicitation Documents.

48. Defendants owed to Plaintiff and other members of the Class who purchased or

otherwise acquired an investment stake pursuant to the materially untrue Solicitation Documents

the duty to make a reasonable and diligent investigation of the statements contained in the

Solicitation Documents, to insure such statements were true and that there was no omission of

material fact necessary to prevent the statements contained therein from being untrue.

Defendants did not make a reasonable investigation or possess reasonable grounds to believe that

the statements contained in the Solicitation Documents were true and without omissions of any

material facts and were not misleading. By virtue of the conduct alleged herein, Defendants

violated Section 12(a)(2) of the Securities Act.

49. Plaintiff, individually and representatively, hereby offers to tender to Defendants

those interests which Plaintiff and other Class members continue to own, on behalf of all

members of the Class who continue to own such interests, in return for the consideration paid for

those interests together with interest thereon. Class members who have sold their OGR Fund

interests are entitled to recessionary damages.

12

COUNT II (Against the Individual Defendants, OAM, AIM, and Opco)

Violations of Section 15 of the Securities Act 50. Plaintiff repeats and re-alleges each of the allegations set forth above as if fully

set forth herein. This Count is asserted against the Individual Defendants for violations of

Section 15 of the Securities Act, 15 U.S.C. § 77o, on behalf of Plaintiff and the other members of

the Class who purchased or otherwise acquired interests in the OGR Fund.

51. At all relevant times, the Individual Defendants were controlling persons of the

OGR Fund within the meaning of Section 15 of the Securities Act. Each of the Individual

Defendants served as an executive officer and/or director of the OGR Fund prior to and at the

time of the interests being solicited and sold. Each of the Individual Defendants at all relevant

times participated in the operation and management of the OGR Fund, and conducted and

participated, directly and indirectly, in the conduct of the OGR Fund’s business affairs. As such,

the Individual Defendants had a duty to disseminate accurate and truthful information with

respect to the OGR Fund. By reason of the aforementioned conduct, the Individual Defendants

are liable under Section 15 of the Securities Act, jointly and severally with, and to the same

extent as, Defendants to Plaintiff and the other members of the Class.

VII. PRAYER FOR RELIEF

WHEREFORE, Plaintiff, on its own behalf and on behalf of the Class, prays for

judgment as follows:

(a) Determining this action to be a proper class action and certifying Plaintiff as class

representative under Rule 23 of the Federal Rules of Civil Procedure;

PLAINTIFF'S CERTIFICATION OF SECURITIESCLASS ACTION COMPLAINT

I, Harold P. Hatma, Jr., Executive Director of the City of Brockton Retirement Board("Brockton Retirement Board"), hereby certi fy that the following is true and correct to thebest ofmy knowledge, information and belief:

l. 1 am the Executive Director of the Brockton Retirement Board and amauthorized to make decisions regarding the initiation of litigation on behalf of the BrocktonRetirement Board.

2. I have reviewed the complaint against Oppenheimer Global Resource PrivateEquity Fund I, L.P. and authorize its filing by Block & Leviton LLP.

3. The Brockton Retirement Board did not purchase the securities that are thesubject of this action at the direction of counselor in order to participate in any private actionarising under the United States federal securities laws.

4. The Brockton Retirement Board is willing to serve as a representative party onbehalf of the class in this action, including providing testimony at deposition and trial, ifnecessary.

5. On March 26, 2010, the Brockton Retirement Board committed $5 million tothe Oppenheimer Global Resource Private Equity Fund I, L.P. As of the date of thisCe11ification, Oppenheimer Global Resource Private Equity Fund I, L.P. has already drawnupon this $5.0 million of committed funds in the following specific transactions:

DATE TRANSACTION AMOUNT OF(buy or sell) INTERESTS

PURCHASEDJuly31,2010 Buy $2,050,000April 30, 20 II Buy $400,000June 30, 2011 Buy $500,000November 30, 20 I I Buy $250,000

6. Below is a list of cases filed pursuant to the United States federal securitieslaws that were filed during the three-year period preceding the date of my signing thisCet1ification in which the Brockton Retirement Board has sought to serve, or served, as arepresentative party on behalf of a class:

Medaffv. CVS Caremark CO/p., 09-cv-00554 (D.R.L)In re Accuray Inc. Sec. Litig., 09-cv-03362 (N.D. Cal.)

City a/Brockton Ret. Sys. v. Avon Products, Inc., II-cv-04665 (S.D..Y.)

7. The Brockton Retirement Board has not and will not accept any payment forserving as a representative pat1y on behalf of the Class beyond its pro rata share of any

possible recovery, except for an award, as ordered or approved by the court, for reasonablecosts and expenses (including lost wages) directly relating to its representation of the Class.

Signed under the penalties of perjury this 26th day ofMarch, 2012.

Harold P. Hanna, Jr.,Executive Director of the City ofBrockton Retirement Board

2