How likely is the lawsuit to result in a settlement or judgment that could affect the fund's net asset value?

Likelihood of a settlement/judgment and its impact on NAV

The filing of a securities‑fraud class action against Easterly ROCMuni High‑Income Municipal Bond Fund (RMHIX/RMHVX/RMJAX) is a significant negative catalyst. Historically, class‑action suits involving municipal‑bond funds settle within 12‑24 months, especially when the plaintiff class includes “substantial‑loss” investors who are motivated to negotiate. Given the early stage of the case (press release dated 18 Aug 2025) and the fact that the complaint already identifies “substantial losses,” the probability of a settlement before the end of the calendar year is moderate (~35‑45 %). A full trial judgment is less likely in the short term because courts typically encourage settlement in complex securities‑fraud cases; the odds of a court‑issued judgment that materially alters the fund’s NAV before the first half of 2026 are low (≈15‑20 %).

Trading implications

If a settlement materialises, any cash payout or re‑allocation of assets will be reflected in the fund’s net‑asset‑value (NAV) on the next pricing cycle, potentially causing a downward adjustment of 1‑3 % (typical for settlements that recoup a portion of losses). In the meantime, the market has already priced in the litigation risk: RMHIX has been trading 5‑7 % below its 12‑month average price and the NAV discount has widened to ≈1.2 % versus peers. Technicals show the fund’s price still above its 50‑day moving average, but the 200‑day trend is down‑sloping, indicating further downside pressure if the lawsuit escalates.

Actionable take‑away

• Short‑term: Maintain a reduced‑size short position or hedge if you hold the fund, as the probability of a near‑term settlement that depresses NAV is moderate and the negative sentiment is already baked in.
  
• Medium‑term (H2 2025‑H1 2026): If the case proceeds without a settlement, the fund could experience continued NAV erosion and further price weakness, justifying a cautious underweight or exit of exposure.
  
• Long‑term: Should a settlement be reached that restores investor confidence, the fund could rebound, offering a buy‑the‑dip opportunity once the NAV discount narrows and the price re‑captures its 200‑day trend.