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BOSTON-FMR Co., the investment adviser to the Fidelity funds, is fully covered for the $10 million settlement it has reached in a class-action lawsuit over a comment made by a former Magellan Fund manager regarding the value of a company's shares held by the fund.

Jeff Vinik, who managed the Magellan Fund in 1995, informed fund shareholders in a Sept. 30 semi-annual report that the fund continued to be optimistic about technology stocks and that shares of Micron Technology in particular remained "relatively cheap."

A class of Micron shareholders who purchased their stakes between Nov. 9 and Nov. 30 that year alleged that Mr. Vinik made his comments in an effort to manipulate Micron's stock price so Magellan could easily sell off its Micron stake at a substantial profit. That alleged manipulation, which is prohibited by federal securities law, financially harmed the several thousand class members, the lawsuit claimed.

From Sept. 30 until Nov. 9, Micron share prices increased substantially because of Mr. Vinik's comments, said Glen DeValerio, the plaintiff attorney for the class. But, instead of holding onto its Micron stake, the Magellan Fund sold about 2 million of its 15 million Micron shares during that period, said the attorney, a partner with Berman, DeValerio & Pease L.L.P. of Boston.

After Nov. 9, the Magellan Fund unloaded the remainder of its Micron stake. The selloff prompted a slide in Micron's stock price, but not as precipitous a decline as the stock would have suffered if Mr. Vinik had not made his remarks in the Sept. 30 Magellan Fund report, according to Mr. DeValerio.

Still, the Micron stock price fell far below the price at which the class members had purchased the stock, which they would not have purchased if not for Mr. Vinik's comments, Mr. DeValerio said.

FMR said in statement that it agreed to the settlement, which is subject to court approval, to avoid costly and disruptive litigation. Fidelity does not admit to any wrongdoing.

Mr. Vinik left Fidelity in 1996.

Judy Lindenmayer, vp-Fidelity insurance and risk management at FMR Corp., the parent company of FMR, would not comment on the coverage available to pay the settlement.

However, a Business Insurance profile of Ms. Lindenmayer, who is the 1997 Risk Manager of the Year, reported that FMR is covered for such losses by an integrated, or concentric, risk program (BI, April 14). The program is underwritten mainly by American International Group Inc., Chubb Corp., Reliance Insurance Group and underwriters at Lloyd's of London.

J&H Marsh & McLennan Inc. placed the coverage.

A federal court previously dismissed the Magellan Fund, which is a separate entity from FMR, and the fund's shareholders from the litigation.