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Former Evergreen Portfolio Manager Charged With Fund Pricing Violations

The SEC recently filed charges against Lisa Premo, a former portfolio manager of the Evergreen Ultra Short Opportunities Fund, for her role in the fund's pricing errors.  According to the SEC, in early 2008, Ms. Premo learned that a collateralized debt obligation ("CDO") owned by the Fund had defaulted and would no longer make payments to the Fund.  Under the Fund's pricing procedures, Ms. Premo was required to review on a daily basis the prices being assigned to the CDO and notify Evergreen's pricing committee of any price that she did not think reflected the holding's fair value.  However, Ms. Premo allegedly failed to tell the committee (of which she was a member) about the CDO's default and stoppage of payments to the fund.  In June 2008, when the committee became aware of the default and payment stoppage, it reduced the value assigned to the CDO from approximately $6.98 million to $0, resulting in a $0.10 per share drop in the Fund's NAV.  The SEC has concluded that this set in motion a chain of events that, within a week, led to the Fund's liquidation.  The SEC has charged Ms. Premo with violating anti-fraud provisions of the Advisers Act and aiding and abetting Evergreen's violations of these provisions.  In 2009, Evergreen agreed to a $41 million settlement with the SEC for its role in these events.