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Altamirano PLLC is investigating claims involving the Easterly ROCMuni High Income Fund (tickers RMJAX, RMHIX, and RMHVX), which collapsed with breathtaking speed, wiping out hundreds of millions in investor capital within two weeks.
Marketed as a municipal bond fund designed to deliver steady, tax-exempt income, the fund was anything but safe. Investors who believed they were buying a conservative income product instead faced devastating losses.
If you invested in the Easterly ROCMuni Fund through a brokerage firm or financial advisor, you may be able to recover your losses through FINRA arbitration.
Our law firm is evaluating potential claims including violations of Regulation Best Interest (Reg BI), unsuitable recommendations, misrepresentation, failure to conduct reasonable due diligence, and misleading or incomplete risk disclosures, among other forms of misconduct. Read more in our Easterly ROCMuni High Income Fund Investor Investigation.
What Happened to the Easterly ROCMuni High Income Fund and Why It Collapsed
On June 13, 2025, the Easterly ROCMuni Fund shocked the market by abruptly marking down the value of its shares by roughly 30 percent in a single day. RMHIX fell from $6.15 to $4.33 per share, RMHVX dropped from $6.19 to $4.36, and RMJAX declined from $6.13 to $4.31. Within two weeks, all three share classes traded below $3 per share, and hundreds of millions in investor capital evaporated. The speed and scale of the collapse were virtually unprecedented among municipal bond mutual funds.
According to the fund’s offering materials, the portfolio held more than 130 individual assets as of March 31, 2025, and followed a diversified investment strategy focused on municipal bonds. Yet comparable funds and indexes showed no such declines. The Bloomberg Municipal Bond Index and the Bloomberg High Yield Municipal Bond Index both increased during the same period. Industry outlet The Bond Buyer described the event as a “one-off fire sale” that did not reflect the broader market. The publication attributed the losses to fund-specific factors including flawed pricing, illiquidity, and insufficient diversification. It reported that Easterly had been forced into distressed trades with buyers snapping up bonds at sharp discounts. These trades reflected dramatic markdowns from prior valuations and revealed how concentrated and fragile the portfolio had become.
The fund’s total net assets plummeted from over $230 million as of March 31, 2025, to less than $17 million by July 8, 2025. According to a class action complaint, some of the distressed debt that fueled the collapse included bonds sold for mere pennies on the dollar.
A note by Birch Creek Capital observed that many of these bonds traded at steep discounts to the fund’s evaluated prices. One investor allegedly paid two cents for $800,000 in bonds issued by Proton International Alabama, LLC, while another paid four cents for $3.2 million in bonds from Gladieux Metals Recycling LLC, the fund’s largest position at the end of the first quarter of 2025.
The class action complaint, filed July 22, 2025, was brought on behalf of all persons who purchased shares of the fund between May 5, 2023 and June 12, 2025 and sustained damages.
How the Fund Was Marketed
According to its prospectus, the Easterly ROCMuni High Income Municipal Bond Fund’s primary investment objective was to provide income exempt from federal taxes, and its secondary objective was to seek total return. It described itself as a municipal bond fund and suggested investors could qualify for sales charge discounts for large investments across Easterly products.
As a mutual fund, the product was subject to the regulatory framework designed to protect the investing public under the Investment Company Act of 1940 (“ICA”) and the Securities Act of 1933. Mutual funds must register with the SEC, file periodic reports, maintain risk-management procedures, and act in the best interests of shareholders. They must calculate and publish a daily net asset value (“NAV”) and stand ready to redeem shares at that price. Because mutual funds must maintain liquidity to meet redemption requests, they are subject to limits on concentration, leverage, and exposure to illiquid or speculative assets.
Investors associate municipal bond funds with safety and stability. The fine print told a different story. The Easterly ROCMuni Fund disclosed that it could invest in distressed and defaulted debt securities, including bonds issued by companies undergoing reorganizations or bankruptcies. These investments are highly speculative and carry substantial risk, including the risk that principal would not be repaid. The prospectus also acknowledged that the fund might not receive interest payments on these securities, could incur costs to protect its investments, and might lose its entire principal in a default or restructuring. The fund’s strategy also permitted it to buy Rule 144A private placements and other illiquid assets, use leverage through credit lines, and hold below-investment-grade securities, features inconsistent with the liquidity and diversification investors expect from a registered mutual fund. Despite these risks, the fund was still marketed and sold by brokers as a stable, tax-exempt income product suitable for conservative investors.
Easterly Securities LLC served as the principal underwriter and national distributor of the fund, offering shares on a continuous basis. Easterly Securities is an affiliate of the fund’s investment adviser, Easterly Investment Partners LLC, and participated in preparing and marketing the fund’s offering materials as well as soliciting investors for the fund.
According to the class action complaint, the offering materials issued throughout the May 5, 2023 to June 12, 2025 class period contained material misstatements and omissions. Specifically, the fund allegedly:
- Marked tens of millions of dollars’ worth of portfolio assets at inflated prices that did not reasonably reflect fair value;
- Employed a flawed pricing and valuation methodology that systematically overstated the Fund’s NAV and asset values;
- Held significantly more illiquid assets than disclosed;
- Was more closely correlated and less diversified than represented; and
- As a result, carried a material, undisclosed risk of a sudden collapse in share price.
Key Takeaway for Investors
The Easterly ROCMuni Fund’s losses stemmed from high-risk strategies, compounded by the failure of brokerage firms to properly vet, supervise, and disclose the risks of what they were selling. Investors who were told they were buying a municipal bond fund can hold their brokerage firm accountable and recover their losses.
The Easterly ROCMuni Fund debacle highlights how complex, high-risk funds can be packaged and sold as safe investments. Brokers who recommended the fund to retirees and income-focused clients often repeated the marketing language without understanding or disclosing the risks. Investors were told they were purchasing a municipal bond fund, not a leveraged junk-bond portfolio filled with distressed projects.
According to the allegations in the class action complaint, the Easterly ROCMuni Fund operated more like a leveraged, distressed-debt vehicle under the guise of a highly regulated mutual fund, leaving investors exposed to a rapid and unexpected decline in value. No comparable municipal bond fund experienced a similar drop.
Investors had no reason to expect that a fund promising tax-free income would hold defaulted securities or make distressed-debt bets. The result was a total mismatch between what investors were promised and what they received.
Broker and Firm Failures
Brokers and firms must abide by industry standards. FINRA Rule 2111 requires that investment recommendations be suitable based on a client’s financial situation and risk tolerance. FINRA Rule 3110 requires firms to supervise sales practices and review the products their advisors sell.
Regulation Best Interest (Reg BI) raises the standard of conduct for brokers beyond the traditional suitability obligation. It requires brokers to act in the best interest of the retail customer at the time a recommendation is made, without placing the broker’s or the firm’s financial interests ahead of the investor’s. It also requires firms to establish, maintain, and enforce written policies and procedures to identify, disclose, and, when necessary, mitigate or eliminate conflicts of interest. The standard cannot be satisfied through disclosure alone; brokers must take proactive steps to ensure their recommendations serve the investor’s best interest. These failures may also give rise to securities violations under federal and state law.
The Easterly ROCMuni Fund’s structure and holdings should have raised immediate red flags for any compliance department. Brokers who placed retirees and conservative investors into the fund ignored those warnings. Firms that approved or encouraged the sale of Easterly ROCMuni Fund to retail clients may have failed to meet their supervisory and best interest obligations.
Brokers pitched the Easterly ROCMuni Fund as a “safe” municipal fund, failing to disclose leverage and illiquidity, and ignoring the growing concentration of high-risk holdings within the fund’s portfolio.
How Investors Can Recover
Investors who lost money in the Easterly ROCMuni Fund may be able to recover their losses through FINRA arbitration. Investors can file a FINRA arbitration claim against the brokerage firm that recommended and sold the fund. Potential claims include unsuitable recommendations, fraud or misrepresentation, Reg BI violations, negligence, failure to disclose or inadequate disclosure of risks, and failure to conduct adequate due diligence.
Recoverable damages may include principal losses, fees, and other available remedies under federal and state securities law. FINRA arbitration provides a confidential, streamlined process for investors to hold brokerage firms accountable.
Stifel, Nicolaus & Co. and Osaic Wealth (formerly Royal Alliance Associates Inc.) have been mentioned as two brokerage firms that recommended and sold the fund in connection with potential investor claims.
Contact Altamirano PLLC About Easterly ROCMuni Fund Losses
If you invested in the Easterly ROCMuni High Income Fund and suffered losses, contact Altamirano PLLC at (212) 220-6556 to discuss your recovery options. The firm represents investors nationwide in FINRA arbitration. Jorge Altamirano, Principal of Altamirano PLLC, has handled more than 1,500 investor cases and recovered millions of dollars for clients harmed by unsuitable recommendations or broker negligence.
