OppenheimerFunds Inc. has reached a $20 million settlement on a lawsuit over heavy losses in Oregon's 529 college savings plan.

The New York-based fund company last night announced the agreement in principle to settle the lawsuit brought by Oregon. The settlement will divide the $20 million among about 45,000 account holders based on how heavily individual accounts were invested in the OppenheimerFunds Core Bond Fund, according to the The Wall Street Journal. The suit alleges that Oregon 529 plan college savers, primarily those invested in the Core Bond Fund, lost at least $36.2 million as a direct result of the company's negligence and breaches of contract and fiduciary duty. Oppenheimer Core Bond Fund was part of five age-based portfolios in the Oregon College Savings Plan.

The character of the Core Bond Fund changed in 2007 and 2008, the lawsuit alleges, and yet neither the state nor investors were alerted that the fund had become significantly more aggressive and risky.

The settlement allows both Oregon and OppenheimerFunds to avoid a lengthy and expensive legal process and to apply resources to more constructive ends, the company said.

Oregon and OppenheimerFunds currently expect the $20 million will be distributed to eligible plan participants early next year, but further details on timing and the state's plans for distribution of the funds will be released after the settlement is finalized.