The firms and individuals behind the Easterly ROCMuni High Income Municipal Bond Fund (the “Easterly Fund”), which collapsed last June, are facing lawsuits and arbitration proceedings filed by investors across the country. While many investors are pursuing claims in FINRA arbitration—which allows them to seek full compensation for their investment losses—some have chosen to pursue a putative class action in federal district court.

A notable development recently occurred in the putative class action. On August 17, 2026, Judge Cote of the U.S. District Court for the Southern District of New York (SDNY) issued an order addressing multiple motions filed in the case. One of these was the defendants’ motion to dismiss the plaintiffs’ complaint in full. While Judge Cote granted the motion as to certain defendants, she denied it as to the others—and, in doing so, noted two claims in particular that the plaintiffs had “plausibly allege[d].”

Easterly Fund Defendants Allegedly Exceeded the Fund’s Illiquid Investment Limits

One of these claims involved the plaintiffs’ allegations that the Easterly Fund exceeded its self-imposed illiquid investment limit. According to the plaintiffs, the Easterly Fund’s registration statements stated that the Fund would not hold more than 15 percent of its net assets in illiquid investments. The registration statements defined “illiquid investments” in accordance with SEC Rule 22e-4 (as investments that the Fund “reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment”).

The plaintiffs alleged that the Easterly Fund failed to comply with its self-imposed illiquid investment limit from July 2022 through June 2025. According to the plaintiffs, the fund acquired several securities that “exhibited numerous characteristics that . . . are indicative of illiquidity.”

In response, the defendants asserted several arguments, including accusing the plaintiffs of “rel[ying] impermissibly on hindsight.” While Judge Cote acknowledged that the defendants’ arguments, “may ultimately bear on the weight of [the plaintiffs’] evidence,” she determined that they did not warrant pre-trial dismissal.

Easterly Fund Defendants Allegedly Omitted Information About Securities that Were in Default

The other claim that Judge Cote specifically noted was the plaintiffs’ claim related to the defendants’ failure to fully disclose securities that were in default. As explained in the August 17 order:

“The [plaintiffs] allege[] that the Fund’s 2024 semiannual and annual financial statements identified certain portfolio securities as being in default while allegedly failing to identify other securities that were likewise in default. Those financial statements were incorporated into the [Fund’s] September, October, and December 2024 registration statements. Consequently, in those registration statements, the Fund understated its exposure to distressed assets, which a reasonable investor would consider relevant in assessing the investment.”

While the defendants argued that they had disclosed the relevant defaults elsewhere, Judge Cote rejected this argument on two key grounds. First, she cited Second Circuit precedent holding that, “the mere availability elsewhere of truthful information cannot excuse untruths or misleading omissions.” Second, she noted that federal law requires registrations to be “materially accurate.” Accordingly, she allowed the plaintiffs’ allegations that the Easterly Fund failed to disclose defaulted securities to proceed.

FAQs: Seeking Compensation for Easterly Fund Investment Losses

Which investors are eligible to file claims related to the Easterly Fund collapse?

All investors who suffered losses when the Easterly Fund collapsed in June 2025 may be eligible to file damage claims. This includes investors who relied on the recommendations or discretion of brokerage firms such as Charles Schwab & Co., Oppenheimer & Co., Raymond James Financial Services, Inc., and RBC Capital Markets, LLC (click here for a complete list).

How can investors seek compensation for losses from the Easterly Fund collapse?

While some investors are pursuing class action litigation, our firm is representing defrauded investors in Financial Industry Regulatory Authority (FINRA) arbitration. Investors who file FINRA arbitration claims can seek full compensation for their losses from their brokerage firms.

What is the current status of the Easterly ROCMuni High Income Municipal Bond Fund?

The Easterly ROCMuni High Income Municipal Bond Fund is currently undergoing liquidation, though it faces challenges related to the pending putative class action lawsuit discussed above. In this case, investors stuck with Easterly Fund losses will likely be better off pursuing claims against their brokerage firms rather than pursuing claims against the Easterly Fund directly. If you need to know more, our lawyers can help you make informed decisions about your next steps.

How Zamansky LLC Can Help

Zamansky LLC is a securities fraud law firm that exclusively represents defrauded investors. If you suffered losses when the Easterly Fund collapsed, our lawyers can determine if you have a claim against your brokerage firm.

If you do, we can pursue your claim in FINRA arbitration. We have extensive experience helping investors recover losses through arbitration, and we can use that experience to seek accountability on your behalf. The statute of limitations for claims related to the Easterly Fund collapse has not yet expired, so we encourage you to contact us to discuss your claim today.

Schedule a Free Consultation with a Securities Arbitration Lawyer Today

To speak with a securities arbitration lawyer at Zamansky LLC about filing a claim related to the Easterly Fund collapse, contact us today. Call us at 212-742-1414 or tell us how we can reach you online to arrange a free, no-obligation initial consultation.

The post Easterly Fund Litigation Update: Judge Allows Claims Related to Illiquid Investment Limits and Misleading Omissions appeared first on Zamansky LLC.

Before investing in a structured note, make sure you know what you’re getting into. Other options may offer similar rates with less cost and risk. If you’ve lost a significant amount of money on structured notes, you may also have a claim against your broker for selling an unsuitable investment. Contact our office today to discuss your legal rights and options.

The post Structured Notes: High Yields Can Come With Hidden Risks appeared first on Zamansky LLC.

Regarding the case, our own investment fraud attorney, Jake Zamansky, was quoted in a recent article in The Bond Buyer. You can read that article here.

The post Jake Zamansky Quoted in The Bond Buyer Regarding Easterly Fund Class Action Suit appeared first on Zamansky LLC.

Diversification is a fundamental tenet of investing for long-term growth. Diversifying helps investors protect against facing substantial losses due to isolated events; or, in the words of the U.S. Securities and Exchange Commission (SEC), “[d]iversification is about managing risk while preserving the potential for return.”

Because diversification is so important, investment advisors have a duty to diversify their clients’ portfolios. Investment advisors must make diversified investments that align with each client’s unique risk profile. If an investment advisor fails to adequately diversify a client’s portfolio, this can provide grounds for legal action if the client suffers losses that could (and should) have been avoided.

When Do Investment Advisors Have an Obligation to Diversify?

Investment advisors are required to adequately diversify their clients’ portfolios as part of their duty of care. This is a fiduciary duty that all investment advisors owe to their clients under federal law. Under the duty of care, investment advisors have a legal obligation to manage their clients’ portfolios in their clients’ best interests—including diversifying to the extent necessary to achieve their clients’ investment objectives.

The obligation to diversify exists regardless of the size of a client’s portfolio. As a client’s portfolio grows, the client’s risk grows as well. This makes it essential for investment advisors to proactively manage the diversification of their clients’ portfolios on an ongoing basis.

What Are the Risks of Inadequate Diversification?

The risks of inadequate diversification can be substantial. If an investor’s portfolio is not adequately diversified, the investor can suffer substantial losses due to isolated events that do not affect the market as a whole.

The opposite of diversification is overconcentration. Broadly, overconcentration can take two main forms:

• Overconcentration in Individual Investments – The most straightforward form of overconcentration involves investing too much of a client’s portfolio in one or more individual securities or investment products.
• Overconcentration in a Specific Industry (or Industries) – Overconcentration can also involve failing to invest outside of a particular industry (or industries). Even if an investor owns multiple companies’ stock, if all of these companies are in the same industry, this could still constitute a lack of diversification.

When Can (and Should) Investors Take Legal Action Against Their Investment Advisors?

Investors can take legal action against their investment advisors when they suffer losses due to lack of diversification. In this scenario, investors can seek to recover their investment losses through the FINRA arbitration process.

Even if it is theoretically possible for an investor’s portfolio to regain its value over time, FINRA arbitration may still be warranted. Investors who have questions about their legal rights should consult with an experienced investment loss attorney to ensure that they are making informed decisions.

FAQs: Dealing with Investment Losses Due to Lack of Diversification

How can I determine if my investment advisor has diversified my portfolio?

Determining whether your investment advisor has adequately diversified your portfolio requires knowledge of the market and the legal standards that apply. If you are facing investment losses that you suspect may be due to your investment advisor’s failure to adequately diversify your portfolio, it will be worth talking to an investment loss attorney about your legal rights.

How can I prove that my investment losses are due to lack of diversification?

Proving that your investment losses are due to lack of diversification is a multi-step process that requires several forms of documentation. To start the process, you should save copies of your recent account statements and your current risk profile (or your risk profile at the time the losses occurred). Once you have these available, you should schedule a free consultation with an attorney who has experience representing investors who have suffered losses due to overconcentration.

What is involved in filing for FINRA arbitration?

Filing for FINRA arbitration is also a multi-step process that requires several forms of documentation. Due to the complexity—and the importance—of the process, we strongly recommend working with an experienced attorney from the outset of your claim. This will help maximize your chances of success while also ensuring that the process is as smooth and efficient as possible.

How Zamansky LLC Can Help

Our attorneys have decades of experience representing investors in overconcentration claims against their investment advisors. We have a long track record of success in FINRA arbitration, and we have secured numerous settlements and arbitration awards for our clients. If you have questions about filing a claim against your investment advisor for inadequate diversification, our attorneys can:

• Determine if your investment advisor overconcentrated your portfolio;
• Calculate your investment losses resulting from your investment advisor’s failure to diversify;
• Gather all of the documentation needed to establish your claim for liability;  
• Prepare and file a FINRA arbitration complaint on your behalf;
• Target a favorable settlement on your behalf and pursue an arbitration award if necessary.

You can get started with a free and confidential consultation, and we handle most investment loss cases on a contingency-fee basis. If your case is eligible for contingency-fee representation, you will not have to pay anything out of pocket for our legal representation.

Speak with an Investment Loss Attorney at Zamansky LLC for Free

Do you need to know more about pursuing an overconcentration claim against your investment advisor? If you have questions about seeking to recover your investment losses, we invite you to get in touch. To speak with an experienced investment loss attorney at Zamansky LLC in confidence, call us at 212-742-1414 or request a free initial consultation online today.

The post Is My Investment Advisor Required to Diversify My Portfolio? appeared first on Zamansky LLC.

ALTS lack “liquidity ” as there is no direct market if an investor wants to sell out. In fact, some ALTs require an investor to hold on for five or ten years before selling out. Many private equity funds such as Blue Owl have experienced substantial losses; investors seeking to cut their losses are stopped from exiting due to a “gate,” which limits redemptions. The “net asset value” (NAV) of ALTs is determined by the issuer and often does not reflect the true value of the investment.

Recent reports of Funds holding Pre-IPO share, such as SpaceX, detail investors being abused as well as charges of outright fraud by “boiler rooms” selling Pre-IPO private companies. The Financial Advisor pushing the ALT usually derives a high commission (as high as 5 to 10%) often embedded into the price making it difficult for an investor to see. The high fee undoubtedly serves as the incentive to push these products.

Given all the risks of ALTs, should investors just say “no” to such investments? Its best to consult an investment fraud lawyer to evaluate whether the ALT you are investing in is worth it.

The post Should Retail Investors Just Say No to “Alternative” Investments? appeared first on Zamansky LLC.

SpaceX’s highly anticipated IPO has exposed a troubling side of the booming pre-IPO investment market. Some investors who believed they owned valuable SpaceX shares through Special Purpose Vehicles (SPVs) reportedly discovered that the shares they expected to cash in on had been sold years earlier. As Wall Street increasingly markets access to private companies through complex, layered investment structures, investors should understand whether they actually own the shares they were promised—or merely have “exposure” through a Russian-doll-like chain of funds. Those who believe they were misled about a pre-IPO investment may want to have an investment fraud attorney review what they were actually sold.

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Because of his high leverage and concentration in illiquid private AI firms, a normal market correction turned into a staggering defeat for Aschenbrenner. Jake warns retail investors to diversify and avoid becoming too exposed to AI stocks. If your financial advisor was aggressively pushing AI stocks, consider having your portfolio audited to see if your investments were suitable. Contact our office today to discuss.

The post When AI Investing Goes Wrong: Key Lessons for Retail Investors appeared first on Zamansky LLC.

Wall Street is at it again. They are dumping their private credit funds ( that are experiencing huge losses and investor redemptions) by packaging them into a “bond” seeking a Moody’s rating of “A”. These new “bonds” are referred to as “collateralized fund obligations” or CFOs. These CFOs are now being offered by Financial Advisors as “safe and secure” fixed income investments to retail investors.

Estimates are that between $1 trillion and $1.75 trillion of CFOs and similar products are being marketed to institutional and retail investors.

If the economy turns, private credit funds will implode as did the subprime mortgages in 2008. It won’t be long before these CFOs follow the same path as the CDOs did in 2008.

Contact investment fraud attorney Jake Zamansky to see if your “bonds” are fraudulent private credit investments being dumped by your brokerage.

The post Could Your “Safe” Investments Be Riskier Than You Think? appeared first on Zamansky LLC.

Investors may recall the turn-of-the-century fears associated with Y2K, but the looming dangers of quantum computing could have far greater consequences. Given enough time and advances in quantum computing, they will be able to decrypt the security measures protecting brokerage accounts, bank accounts, cryptocurrency wallets, medical records, and more. Quantum computing experts have nicknamed the day quantum computers can decrypt these security measures “Q-Day”.

Financial institutions should be preparing now with post-quantum security solutions to prevent the compromise of customer assets and information. If your brokerage doesn’t take action and you lose money as a result, contact our office to discuss your legal rights and options.

The post Post-Quantum Risk: The Financial Industry’s Y2K Moment—Only Much Bigger appeared first on Zamansky LLC.

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