Nuveen Investments, a leading global provider of investment services to institutions as well as high-net-worth and affluent investors, today announced that the Circuit Court of Cook County has dismissed with prejudice a complaint filed in relation to the refinancing and/or redemption of several Nuveen closed-end funds' Auction Rate Preferred Shares (ARPS).
As previously announced, a number of Nuveen leveraged closed-end funds each received a demand letter from a law firm on behalf of purported holders of the funds' common shares. Each letter alleged that the fund's Adviser (Nuveen Fund Advisors, Inc.) as well as the fund's Officers and Directors breached their fiduciary duties by favoring the interests of ARPS shareholders over those of common shareholders in connection with each fund's ARPS refinancing and/or redemption activities, and demanded that the Board take action to remedy those alleged breaches.
In response to each of the demand letters, the funds' Board established a Demand Committee of certain of its disinterested and independent Directors to investigate the claims made in the demand letters and to report to the full Board its findings and recommendation. The Demand Committee retained independent counsel to assist it in conducting an extensive investigation of the claims made in the demand letters. Based upon its investigation, the Demand Committee found that it was not in the best interests of the funds or its shareholders to take the actions suggested in the demand letters, and recommended that the full Board reject the demands made in the demand letters. After reviewing the findings and recommendation of the Demand Committee, the Board for each fund, acting through its independent directors, unanimously adopted the Committee's recommendation.
Subsequently, all of the funds that received demand letters were named as nominal defendants in a shareholder derivative action filed in the Circuit Court of Cook County, Illinois. The complaint named the Advisor and various current and former officers of the funds as defendants, and contained the same basic allegations as were contained in the demand letters. The defendants moved to dismiss the complaint, and on December 19, 2011, the court issued an opinion granting the defendants' motion and dismissing the complaint with prejudice. The court ruled that the Board decision to reject the demands contained in the demand letters is protected by the Business Judgment Rule, and that plaintiffs could not overcome those protections unless plaintiffs could show that the Board was not independent or that the Demand Committee's investigation was unreasonable or in bad faith. As to independence, the Court found that "the Shareholder Complaint fails to adequately allege that a majority of the directors were unable to act independently," and that a clear majority of the Board was independent. The court also concluded that the complaint failed to allege that the investigation was not reasonable or lacking in good faith. To the contrary, the court held that the Committee "directly addressed all issues raised by the Demands and stated why litigation would not be appropriate." The court concluded by finding that "the Board acted in good faith and pursuant to a reasonable inquiry when it rejected the Plaintiffs' litigation demand."
Nuveen Investments provides high quality investment services designed to help secure the long-term goals of institutional and individual investors as well as the consultants and financial advisors who serve them. Nuveen Investments markets a wide range of specialized investment solutions which provide investors access to capabilities of its high-quality boutique investment affiliates—Nuveen Asset Management, NWQ, Santa Barbara, Symphony, Tradewinds, and Winslow Capital. In total, Nuveen Investments managed $207 billion as of October 31, 2011. For more information, please visit the Nuveen Investments website at www.nuveen.com.
Contacts:
Nuveen Investments
Media Contact:
Kathleen Cardoza
(312)
917-7813
KATHLEEN.CARDOZA@NUVEEN.COM