Investigation Counsel P.C. and Paul Bates, Barrister (collectively, “Class Counsel”) have filed a class action in Vancouver, British Columbia against Fédération des Caisses Desjardins du Québec, Desjardins Trust inc. and Desjardins Investments inc. regarding the Desjardins Canadian Equity Fund and the Desjardins Canadian Equity Growth Fund (the “Desjardins Funds”).

The plaintiff alleges that assets of the Desjardins Funds, and Desjardins portfolio funds which held it, have been depleted by excessive fees that the defendants have paid to themselves as trustee and manager of those funds.  The fees were excessive because the defendants used an investment strategy based on “closet indexing”, which closely tracks or replicates the fund’s benchmark index, the S&P/TSX Capped Composite Index.  The plaintiff alleges that, as a result of that strategy and the excessive fees charged by the defendants, there was a substantial risk of after-fee underperformance, which in fact materialized over the class period resulting in substantial losses to investors.  Both the defendants’ closet indexing strategy, and the Desjardins Funds’ substantial risk of after-fee underperformance, were never disclosed to investors.

This action was filed on behalf of all persons, wherever they reside or are domiciled, who held directly, or indirectly (through their ownership of Desjardins “portfolio” funds) units of the Desjardins Funds at any time from January 17, 2005 to present.  The Desjardins portfolio funds that held the impugned Desjardins Funds during the class period included the following:

(i) Melodia Moderate Growth Portfolio (ii) Melodia Diversified Growth Portfolio (iii) Melodia Balanced Growth Portfolio (iv) Melodia Aggressive Growth Portfolio (v) Melodia Maximum Growth Portfolio (vi) Melodia Very Conservative Income Portfolio (vii) Melodia Conservative Income Portfolio (viii) Melodia Moderate Income Portfolio (ix) Melodia Diversified Income Portfolio (x) Chorus II Conservative Portfolio (xi) Chorus II Balanced Income Portfolio (xii) Chorus II Balanced Growth Portfolio (xiii) Chorus II Growth Portfolio (xiv) Chorus II High Growth Portfolio (xv) Chorus II Dynamic Growth Portfolio (xvi) Chorus II Aggressive Growth Portfolio (xvii) Chorus II Maximum Growth Portfolio

The class action alleges that the excessive fees paid to the Desjardins defendants over many years has significantly reduced the returns of investors and that investors are entitled to damages including restitution of excessive management fees.

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