Minneapolis-based Investment Advisors has been hit with a class action lawsuit in Minnesota court over capital gains in its Emerging Markets fund. So far as it is known, this is the first time that fund shareholders have brought suit over capital gains paid by a fund.

At issue, according to the suit, is that Investment Advisors failed to inform fund shareholders that the fund was set to pay a $6 per share capital gain in 2002. The suit also alleges that the fund firm was trying to hide the distribution from shareholders to keep them in the fund while it sold the fund to Federated Investors.

The plaintiffs in the suit are being represented by Lockridge, Grindal and Nauen.  

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