Attorney Stephen Tillery has chopped his class actions against mutual funds down almost to nothing.
Facing dismissal of four complaints in the wake of a Fifth District appellate court decision, Tillery moved on April 16 to amend all four.
He disavowed all claims that the Fifth District rejected because they ran afoul of the national Securities Litigation Uniform Standards Act.
Instead of alleging that mutual funds illegally timed trades for their own benefit at the expense of shareholders, he would allege inadvertent market timing.
He would replace claims of misrepresentation with claims of mismanagement. Tillery would eliminate allegations of recklessness or willful and wanton conduct.
He would plead that dilution of assets harmed some shareholders but not all. And, he would not allege that mutual funds had a duty to disclose methods of calculating net asset value.
"Defendants did not fail to disclose any material information in their prospectuses, marketing materials or anywhere else," he wrote.
He wrote that to the extent the funds may have failed to disclose information, plaintiffs would have bought shares at the same price anyway.
"Plaintiffs make no allegation seeking to recover (and they do not seek to recover) the difference between what they paid for their mutual fund shares and some lower price they might have paid," he wrote.
"Plaintiffs do not allege or seek to recover the kind of damages recoverable in a securities fraud case," he wrote.
"Plaintiffs seek recovery for dilution injuries sustained by only some shareholders, injuries which were direct to them, and not for injuries sustained by defendants and indirectly and derivatively by all shareholders," he wrote.
He may have abandoned class actions altogether, writing that the federal act doesn't prevent pursuit of individual claims.
Tillery sued Putnam, Evergreen and Janus funds in Madison County, in 2003.
This January, the Fifth District ordered Circuit Judge Barbara Crowder to dismiss a suit against Putnam Funds Trust and Evergreen Securities Management.
Crowder dismissed the suit on April 5, and two other Putnam funds asked her to dismiss similar suits.
Janus Capital Management and Janus Investment Fund moved to dismiss a similar suit pending before Circuit Judge David Hylla.
Tillery bounced back with new complaints, arguing that any judge who refuses them would commit reversible error.
For Janus Investment Fund, Kurt Reitz of Belleville wrote on April 22 that the new allegations failed to plead a viable cause of action.
"Plaintiff spends so much time detailing what he is not alleging that he fails to present facts supporting what he is alleging," Reitz wrote.
He wrote that it was hard to tell what Janus is supposed to have done wrong.
"Non-deceptive practices that involve only lawful trading are not negligent under the laws of Illinois or any other state," Reitz wrote.
"Plaintiff does not provide any factual basis for these claims, nor any reason why he did not bring them initially," he wrote.
Crowder has set a hearing for Tillery on May 14.