First Trust Strategic High Income Funds

Investment and Securities Fraud Lawyer - Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor, P.A.


Bottom of Peer Group Because of Subprime Mortgages & Iiquid Securities

Levin Papantonio is currently accepting cases for investors who purchased the First Trust family of Strategic High Income mutual funds ("First Trust"). The First Trust mutual funds, the Strategic High Income Fund (FHI), the Strategic High Income Fund II (FHY), and the Strategic High Income Fund III (FHO), held some of the riskiest and most illiquid collateralized debt obligations ("CDO") on the market. In the second half of 2007, the funds dropped an average of 40% and lost a total of $250 million when the underlying debt securities lost their value. In fact, the First Trust mutual funds were at the bottom of the peer group due in large part to their substantial CDO holdings.

CDOs are divided into tranches representing chances of default, with the top tranche being the most reliable, and the bottom trench, known as the "first-to-lose" tranche, the most likely to default. The First Trust mutual funds systematically invested in the bottom tranches of debt vehicles. As a result, the First Trust mutual funds contained significantly more risk than was apparent. In fact, even the most sophisticated of investors would not have been able to determine the amount of risk held by the First Trust mutual funds.

If your financial advisor or money manager recommended the First Trust mutual funds and failed to disclose the significant risks, you may have a claim. Similarly, both individual and institutional investors who relied on the First Trust prospectus and/or marketing material and purchased a First Trust mutual fund and suffered losses as a result of the purchase, may have a claim. Please contact Peter Mougey at Levin Papantonio so we can assist you with the analysis of your losses.