Maryann Bruce, who runs Oppenheimer Management Co.'s sales through banks, began flooding her clients with telephone calls last week.
But she wasn't making a sales pitch.
She was trying to prevent a potential fire storm when a star portfolio manager of one of her most popular funds quit.
Last Friday, the New York-based mutual fund giant announced that John Wallace, who runs the Oppenheimer Main Street Income and Growth Fund, was leaving to manage a no-load fund at Robertson Stephenson & Co., San Francisco.
Ms. Bruce, director of the financial institutions division, and her four wholesalers put out calls to 50 of the company's 300 bank clients, to stem a potential loss in confidence.
"We do sell this fund through banks nationwide," she said. "It's a popular fund. Depending on the month, the fund can do 20% or 30% of our sales through banks."
Ms. Bruce said the fund's portfolio style and objectives won't change, and there are four managers overseeing it in the interim."Once that was expressed to the banks, they felt comfortable," she said.
Mr. Wallace, 41, will leave a fund that captured $2.9 billion of managed assets, a dazzling 126-fold jump from a mere $23.7 million in 1991. The five-year total return was 24.88%, seventh highest of all mutual funds as of June 8, according to Lipper Analytical Services Inc.
The fund was sold exclusively through California Federal Bank, Los Angeles, until 1993 when Oppenheimer opened it up to the public. The fund managed $100 million of assets then.
Mr. Wallace's distinctive strategy of keeping a portfolio of volatile small and midsize company stocks, with a high turnover rate, led to such stellar performance that Oppenheimer opened the fund to other distribution channels in 1993.
Mr. Wallace, who did not return telephone calls, will start up a no-load fund July 11 called Robertson Stephenson Growth and Income Fund.
Oppenheimer played down Mr. Wallace's exit. "Since we made this public, every day we have seen positive net sales," said Robert Doll, director of equity investments at Oppenheimer.
"Last week, for example, new sales to redemptions continue to run 8 to 1," he said.
Mr. Wallace, who hails from Idaho, left Oppenheimer because he "hated New York and the East Coast," Mr. Doll said. He denied that Mr. Wallace's departure was related to a recent settlement he made with the Securities and Exchange Commission.
In a case in which he did not admit or deny wrongdoing, Mr. Wallace was alleged to have failed to report 13 personal stock trades occurring in 1993. He paid $20,000 and Oppenheimer withheld his bonus and stock options worth $200,000.
Mr. Wallace's exit prompted Morningstar's president, Don Phillips, to tell The Wall Street Journal there was no longer any reason to invest in this fund.
But Morningstar analyst Kathleen Hartman questioned her own boss's judgment, saying she didn't expect a selloff from the Oppenheimer fund and adding, "People shouldn't be investing for just a manager alone."
Mr. Wallace's exit is the latest in a wave of portfolio managers' departures, including those from Putnam Investments, Fidelity Investments, and Chase Manhattan Bank Corp., which lost high-profile Mark Tincher from its Vista Growth and Income Fund.
Mutual fund analysts Morningstar and Lipper said they have not seen drops in assets yet for these funds.
