SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16938 / March 22, 2001
Securities and Exchange Commission v. Heartland Group, Inc., Civil Action No. 01 C 1984, Judge Joan H. Lefkow (Northern District of Illinois)
The Securities and Exchange Commission filed a Complaint in the United States District Court for the Northern District of Illinois and obtained an Order of Permanent Injunction (Order) against Heartland Group, Inc. (Heartland Group) enjoining Heartland Group from further violations of Sections 30(b), (e) and (g) of the Investment Company Act and Rules 30b2-1, 30d-1(a) and 30d-1(c) promulgated thereunder. The Order also freezes the assets held in Heartland Group, Inc.'s High-Yield Municipal Bond Fund, Short Duration High-Yield Municipal Fund and Taxable Short Duration Municipal Fund (collectively the Funds) and provides for the appointment of a receiver to take control of the assets of the Funds, manage the funds, suspend redemptions in the Funds and, if appropriate, liquidate the Funds. Heartland Group consented to entry of the Order without admitting or denying any of the allegations the Commission's Complaint.
Specifically, the Commission's Complaint alleges that Heartland Group has failed to send an annual report for Heartland Group's High-Yield Municipal Bond Fund, Short Duration High-Yield Municipal Fund and Taxable Short Duration Municipal Fund to the Funds' shareholders, and failed to file the report with the Commission in the time allotted under the federal securities laws. The Commission's Complaint further alleges that this failure is due to Heartland Group's inability to obtain audited financial results for the three funds for fiscal year 2000, due to Heartland Group's independent public accountant's concerns regarding the underlying valuations of the securities held in the Funds. The complaint further alleges that while the auditors have commenced an audit of the Funds, they have stated that they will disclaim any opinion as to the value of the securities held by the Funds during Heartland Group's fiscal year 2000. As a result, shareholders of the Funds are being deprived of statutorily required fundamental financial information upon which they can base a decision to remain invested, or to redeem shares in the Funds. This action does not involve Heartland's Select Value Fund, Value Plus Fund, Value Fund or Wisconsin Tax Free Fund.
The Commission's investigation continues in this matter.