Easterly ROCMuni High Income Municipal Bond Fund (formerly the Principal Street High Income Municipal Fund) — RMJAX; RMHVX; RMHIX; GSTFX; GSTEX; GSTAX

USDC – Southern District of New York

Documents:

• Amended Complaint
• Memo in Opposition of Motion to Dismiss
• Memo in Support of Motion to Strike
• Memo in Support of Motion to Dismiss
• Reply to Support of Motion to Dismiss
• Memo in Opposition of LP Motion to Strike
• Reply to Opposition of LP Motion to Strike
• Order

Please complete the form below to contact Kaplan Fox regarding the Easterly Fund Investigation:

Principal Contacts

Jeffrey P. Campisi

JCampisi@kaplanfox.com

Court Allows Securities Act Claims to Proceed Against Easterly ROCMuni High Income Municipal Bond Fund

The United States District Court for the Southern District of New York, in a decision by District Judge Denise Cote, denied in part defendants’ motion to dismiss in the securities class action arising from the June 2025 collapse of the Easterly ROCMuni High Income Municipal Bond Fund (f/k/a the Principal Street High Income Municipal Fund). The ruling permits investors’ core claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 to proceed.

The Amended Complaint (https://www.kaplanfox.com/wp-content/uploads/2026/02/098-Easterly-SECOND-AMENDED-COMPLAINT-amending-76-Amended-Complaint-002.pdf) alleges that the Fund’s offering documents and other SEC filings issued during the class period contained material misstatements and omissions regarding the Fund’s liquidity, holdings of distressed and defaulted securities, asset valuation practices, and concentration in related business ventures. According to the Amended Complaint, these alleged disclosure failures masked substantial risks within the Fund before its eventual collapse. 

Judge Cote concluded that plaintiffs plausibly alleged that the Fund’s statements concerning liquidity could have been materially misleading. The Amended Complaint alleges that the Fund repeatedly represented that it would not hold more than 15% of its net assets in illiquid investments, while in reality a substantially larger portion of the portfolio allegedly consisted of securities that could not readily be sold without materially affecting their value. The Court held that these allegations were sufficient at the pleading stage and rejected defendants’ arguments that the claims relied improperly on hindsight. 

The Court also sustained claims relating to the Fund’s disclosure of defaulted securities. The Complaint alleges that the Fund’s financial statements identified certain securities as being in default while allegedly omitting numerous other portfolio holdings that were likewise in monetary default. Judge Cote found that the Amended Complaint plausibly alleged that the Fund’s descriptions of its distressed holdings could have been materially misleading, allowing those claims to move forward. 

Judge Cote further ruled that claims for control-person liability under Section 15 of the Securities Act may proceed against certain trust officers and trustees associated with the Fund.

At the same time, the Court dismissed control-person claims against the Fund’s investment advisers and portfolio managers, concluding that the Amended Complaint did not adequately allege that those defendants possessed the authority necessary to direct the management and policies of the trust entities that issued the challenged registration statements. 

The case now proceeds into discovery. Judge Cote ordered the parties to appear for a case management conference on October 8, 2026. 

Kaplan Fox & Kilsheimer LLP serves as Lead Counsel for the proposed class of investors in the action.