Fidelity Investments sued for subprime losses

BOSTON – Fidelity Investments, the world’s largest mutual-fund company, is being sued over losses linked to investments in subprime mortgage-backed securities made by its Ultra-Short Bond Fund, Bloomberg News reported.
Fidelity made “misleading or inaccurate” statements in the bond fund’s registration documents, investor Alan Zametkin said in a complaint filed June 5 in U.S. District Court in Massachusetts. The fund has fallen 6.8 percent this year and 13 percent in the past 12 months.
Fidelity’s is at least the second ultra-short bond fund sued over subprime-related losses. San Francisco-based Charles Schwab Corp., the largest U.S. online broker, faces eight proposed group lawsuits from investors in its YieldPlus Fund, which is down 32 percent in the past year, compared with an average decline of 1.2 percent for similar funds.
“We believe this lawsuit is without merit and intend to defend the case vigorously,” Vincent Loporchio, a spokesman for Boston-based Fidelity, said in an interview.
The complaint, which seeks class-action status, says Fidelity failed to inform investors adequately about the risks associated with the fund’s holdings in mortgage-backed securities. &#8226