RMJAX

What is the expected timeline for the securities lawsuit and could it impact fund performance in the short term?

Created August 09, 2025 at 12:24 AM

Short answer:

- Timeline: The lawsuit has just been opened (the reminder was issued on August 8 2025). From filing to any final resolution – whether by settlement, dismissal or a court judgment – is typically a 12‑to‑24‑month process, with the first 6‑12 months usually spent on class‑certification and discovery.

- Short‑term performance impact: In the near term (the next few weeks to a few months) the suit is unlikely to change the fund’s actual portfolio returns. However, the filing can generate short‑term market volatility, modest redeeming pressure, and a slight price‑adjustment in the fund’s share price while investors assess litigation risk.

Below is a more detailed, step‑by‑step explanation, drawing directly from the information released by Rosen Law Firm and from typical securities‑class‑action timelines.

1. What the news tells us about the lawsuit’s current stage

Fact from the PRNewswire release	What it means for the timeline
“Rosen Law Firm … reminds purchasers … of shares … between May 5 …”	The firm is calling on investors who bought the shares during a specific period to join a class‑action. This is the first public outreach after the complaint has been filed.
Date of the news release: 8 August 2025	The case is freshly filed (or at most a few weeks old). No court rulings, discovery, or settlement discussions have occurred yet.
Fund tickers: RMJAX, RMHVX, RMHIX	The lawsuit targets all share classes of the Easterly ROCMuni High‑Income Municipal Bond Fund, so any settlement or judgment would apply to the entire fund structure.
Law firm: Rosen Law Firm – a global investor‑rights firm	Rosen typically files federal securities class‑actions that progress through the standard federal court pipeline (class certification → discovery → motions → trial/settlement).

From the above, we can infer that the complaint is already filed (the firm would not be “reminding” investors if it were still in the pre‑filing stage). The next procedural milestones will follow the standard federal securities litigation schedule.

2. Expected procedural timeline for a securities class‑action

Phase	Typical duration	Key events that could affect the fund
1. Filing & Service of Process	0‑2 weeks after the press release	The complaint is formally lodged and served on the fund’s advisers, the issuer, and any affiliated parties.
2. Class‑certification motion	3‑6 months	The plaintiffs ask the court to certify a class (all investors who purchased during the defined window). The court may grant, deny, or partially certify the class. A denial would effectively end the case; a grant moves it forward.
3. Discovery (exchange of documents, depositions)	6‑12 months	Both sides request internal communications, underwriting documents, marketing materials, etc. This is the most time‑consuming stage.
4. Pre‑trial motions / Settlement negotiations	3‑9 months (often overlapping with discovery)	The defendant may file motions to dismiss or for summary judgment. Simultaneously, parties often negotiate a settlement. Many securities cases settle before trial, usually in the 12‑18‑month window.
5. Trial (if no settlement)	6‑12 months after the case is ready for trial	If the case reaches trial, a verdict can be rendered within a few weeks, but post‑trial motions and appeals can add additional months.
6. Appeals (if needed)	6‑12 months	An appellate decision can extend the timeline further, though many cases settle before reaching this stage.

Putting it together:

- Earliest realistic resolution (settlement or dismissal): 4‑6 months from now (late 2025).

- Typical “average” settlement window: 12‑18 months (mid‑2026).

- If the case goes to trial: 18‑30 months (early‑2027 or later).

Thus, investors should expect the bulk of the litigation activity to play out over the next 12‑24 months, with the first half‑year being the most uncertain (class‑certification decision).

3. How the lawsuit could affect the fund in the short term (next few weeks‑months)

Potential impact	Likelihood	Mechanism
Share‑price volatility (bid‑ask spread widening, modest price dip)	Medium‑high	The announcement introduces a new legal risk that market participants will price into the secondary market. The effect is usually short‑lived unless the case escalates quickly.
Redemption pressure (investors selling shares)	Low‑medium	Institutional investors or large holders may decide to reduce exposure while the litigation is pending, but most municipal‑bond funds have relatively stable investor bases; redemption spikes are uncommon unless the lawsuit threatens the fund’s assets directly.
Operational distraction for fund management	Low	The fund’s investment team continues to manage the underlying municipal‑bond portfolio; the lawsuit is directed at the offering documents and sales practices, not the securities themselves.
Impact on NAV (Net Asset Value) calculation	Negligible	NAV is based on the market value of the underlying bonds. Until a judgment or settlement imposes a cash settlement or forces fund liquidation, NAV calculation remains unchanged.
Potential for a “settlement fund” or “cash reserve” deduction	Very low in the short term	Only after a settlement is reached (usually years out) might the fund’s assets be reduced to pay plaintiffs. This is a future risk, not a present one.

Bottom‑line for short‑term performance

Performance (total return) over the next 1‑3 months is expected to remain driven by the underlying high‑yield municipal bond market, not by the lawsuit.
Any short‑term dip in the fund’s share price will be a price‑impact effect, not a return effect. Investors who hold through the volatility will still earn the same bond‑interest income and price appreciation/depreciation that the portfolio generates.
If the fund’s share price falls noticeably after the announcement, it will be a market‑driven reaction to perceived legal risk, not a change in the actual assets. This could present a buying opportunity for long‑term investors, but it also signals that some investors are risk‑averse in the wake of litigation.

4. What investors can do now

Confirm eligibility – If you bought shares of RMJAX, RMHVX, or RMHIX between May 5, 2025 and the filing date, you likely qualify to join the class. Rosen Law Firm’s notice provides a deadline (usually 30‑45 days from the notice) to opt‑in.
Monitor the court docket – The U.S. District Court for the Southern District of New York (or the relevant venue indicated in the complaint) will file docket entries for motions and status conferences. Most law‑firm newsletters will flag major developments.
Assess portfolio exposure – The fund’s holdings are high‑yield municipal bonds; consider whether you are comfortable holding those securities if a large cash settlement were eventually required (the settlement amount, if any, would be a proportion of the fund’s assets).
Stay the course or adjust allocation – If you are a long‑term holder and the underlying bonds still fit your risk/return objectives, the lawsuit’s short‑term price impact may be tolerable. If you are more risk‑averse or need liquidity soon, you might rebalance into a municipal‑bond fund with no ongoing litigation.

5. Summary for the original question

Expected timeline: The lawsuit has just been filed (early August 2025). Class certification is expected within the next 3‑6 months, followed by 6‑12 months of discovery. Most securities class actions settle 12‑18 months after filing; a trial would push final resolution out to 18‑30 months. Therefore, investors should anticipate the bulk of the litigation unfolding over the next one to two years.
Short‑term impact on fund performance: In the immediate weeks‑to‑months, the lawsuit is unlikely to affect the actual bond returns of the fund. The most probable effect is a temporary increase in share‑price volatility and possibly a modest sell‑off as market participants price in legal risk. Unless the fund is forced into a large settlement soon (which is improbable), the fund’s NAV and income generation will remain unchanged in the short term.

Bottom line: Expect a legal process that may last a year or more, but no material change to the fund’s underlying performance in the near term—only the usual market reaction to new litigation risk. Investors should stay informed, consider joining the class if eligible, and decide whether any short‑term price movement aligns with their overall investment strategy.