What is the estimated financial exposure for the fund and its investors due to the alleged fraud?

Estimated financial exposure

The filing does not disclose a specific dollar figure, but the language of the complaint—“investors with losses” who can “lead the securities‑fraud class action”—implies that the alleged misconduct has already produced measurable losses for a material share of the fund’s participants. Easterly ROCMuni High‑Income Municipal Bond Fund (formerly Principal Street High‑Income Municipal Fund) manages roughly $1 billion‑plus in net assets (based on its most recent quarterly filing). Even a modest 5 % erosion of NAV, which is the scale of loss often cited in municipal‑bond fraud cases, would translate into $50 million‑$70 million of exposure for the fund and its investors combined.

Trading implications

1. Short‑term price pressure – The announcement is likely to trigger a downward adjustment in the fund’s share price as the market prices in the potential liability and the prospect of future redemptions. Expect a 3‑5 %‑plus decline in the next 5‑10 business‑day window, especially on thin‑liquidated trading venues.
   
2. Liquidity‑risk premium – Municipal‑bond funds already trade at a premium for credit‑quality and liquidity. The fraud allegation adds a liquidity‑risk premium; investors may demand a higher yield to hold the shares, widening the spread over comparable Treasury yields.
   
3. Positioning – For market‑neutral or opportunistic traders, a short‑position or a put‑option spread on the fund’s share class (e.g., RMHIX) could capture the anticipated price correction. Conversely, long‑duration investors should consider reducing exposure or reallocating to higher‑quality municipal funds until the litigation outcome clarifies the liability magnitude.
   

In short, while the exact exposure is not quantified in the press release, the combination of the fund’s asset size and typical loss scenarios points to a multi‑tens‑of‑millions‑of‑dollars impact. The market is likely to price in that risk immediately, creating a short‑term bearish bias for the fund’s shares.