Stockholders v ProShares Trust
Stockholders File Lawsuit Against ProShares Trust
According to the complaint, ProShares sells its Ultra and UltraShort ETFs as simple directional plays. As marketed by ProShares, Ultra ETFs are designed to go up when markets go up; UltraShort ETFs are designed to go up when markets go down. The FXP Fund is one of ProShares UltraShort ETFs. The FXP Fund seeks investment results that correspond to twice the inverse (200%) daily performance of the FTSE/Xinhua China 25 Index (FTSE). Accordingly, the FXP Fund is supposed to deliver double the inverse return of the FTSE, which fell approximately 47 percent from January 2, 2008 through December 31, 2008, ostensibly creating a profit for investors who anticipated a decline in the FTSE. In other words, the FXP Fund should have appreciated by over 94 percent during this period. However, the FXP Fund fell approximately 55 percent during this period.
The complaint alleges the Defendants violated the Securities Act by failing to disclose the following risks, inter alia, in the Registration Statement: (1) if FXP Fund shares were held for a time period longer than one day, the likelihood of catastrophic losses was huge; and (2) the extent to which performance of the FXP Fund would inevitably diverge from the performance of the FTSE -- i.e., the overwhelming probability, if not certainty, of spectacular divergence.
If you bought ProShares Trust securities and would like to obtain information about the ProShares Trust lawsuit, then you are invited to call Kahn Swick & Foti, LLC toll free at (866) 467-1400 extension 100 to speak with an attorney or visit www.ksfcounsel.com.
