An investigation on behalf of current long term investors in ProShares Ultra Bloomberg Crude Oil (NYSEArca:UCO) shares over possible breaches of fiduciary duty by certain officers and directors was announced and NYSEArca:UCO stockholders should contact the Shareholders Foundation.
San Diego, CA -- (SBWIRE) -- 11/03/2020 -- An investigation on behalf of current long-term investors in shares of ProShares Ultra Bloomberg Crude Oil (NYSEArca: UCO) concerning potential breaches of fiduciary duties by certain directors and officers was announced.
Investors who are current long term investors in ProShares Ultra Bloomberg Crude Oil (NYSEArca: UCO) shares, have certain options and should contact the Shareholders Foundation at email@example.com or call +1(858) 779 - 1554.
The investigation by a law firm for current long term investors in NYSEArca: UCO stocks follows a lawsuit filed over alleged securities laws violations. The investigation on behalf of current long term investors in NYSEArca: UCO stocks, concerns whether certain officers and directors are liable in connection with the allegations made in that lawsuit.
ProShares Ultra Bloomberg Crude Oil is an exchange traded fund ("ETF") purportedly designed to reflect the performance of crude oil as measured by the price of West Texas Intermediate ("WTI") sweet, light crude oil futures contracts traded on the New York Mercantile Exchange. ETFs like ProShares Ultra Bloomberg Crude Oil provide one of the primary means investors can gain exposure to fluctuations in oil prices. WTI is the main oil benchmark for North America, as it is sourced from the United States, primarily from the Permian Basin. The main delivery and price settlement point for WTI is Cushing, Oklahoma.
ProShares Ultra Bloomberg Crude Oil stated that it would achieve its investment objective by seeking daily investment results, before fees and expenses, that correspond to two times the performance of its benchmark for a single day, and not for any other period. ProShares Ultra Bloomberg Crude Oil stated that it would not seek to achieve its stated objective over a period greater than a single day.
However, the plaintiff claims that unbeknownst to investors, extraordinary market conditions in early 2020 made ProShares Ultra Bloomberg Crude Oil's purported investment objective and strategy unfeasible, that oil demand fell precipitously as governments imposed lockdowns and businesses halted operations in response to the COVID-19 pandemic. Moreover, the plaintiff says that in early March 2020, Saudi Arabia and Russia launched an oil price war, increasing production and slashing export prices in a bid to increase the global market share of their domestic petrochemical enterprises. As excess oil supply increased and oil prices waned, the facilities available for storage in Cushing, Oklahoma approached capacity, ultimately causing a rare market dynamic known as "super contango," in which the futures prices for oil substantially exceed the spot price and that at the same time, retail investors began pouring hundreds of millions of dollars into ProShares Ultra Bloomberg Crude Oil in an attempt to "buy the dip," believing (correctly) that the price of oil would rebound as economies exited lockdown periods and the Russia/Saudi oil price war ended, and that because of the nature of UCO's investment strategy, these converging factors caused UCO to suffer exceptional losses and undermined UCO's ability to meet its ostensible investment objective.
The plaintiff says that ProShares Ultra Bloomberg Crude Oil quickly deteriorated, as a result of the nature and extent of Defendants' fraud being revealed to investors and the market.
On April 21, 2020, ProShares Ultra Bloomberg Crude Oil held a 1:25 reverse split for its shares.
The plaintiff says that ultimately, ProShares Ultra Bloomberg Crude Oil suffered billions of dollars in losses and was forced to abandon its investment strategy, that through a series of rapid-fire investment overhauls, ProShares Ultra Bloomberg Crude Oil was forced to transform from the passive ETF into an actively-managed fund struggling to avoid a total implosion, and that in April and May 2020, Defendants belatedly acknowledged the extreme threats and adverse impacts ProShares Ultra Bloomberg Crude Oil had been experiencing at the time of the March offering, but which they failed to disclose to investors in a timely manner.
The plaintiff claims that between March 6, 2020 and April 27, 2020, the Defendants issued materially false and/or misleading statements and/or failed to disclose that decreased demand for oil due to the coronavirus pandemic and increased oil supply and diminished oil prices caused by the Russia/Saudi oil price war had caused extraordinary market volatility, that a massive influx of investor capital into the Fund, totaling hundreds of millions of dollars, in a matter of days had increased Fund inefficiencies, heightened illiquidity in the West Texas Intermediate ("WTI") futures contract markets in which the Fund invested, and caused the Fund to approach positional and regulatory limits (adverse trends exacerbated by the Offering itself), that there was a sharp divergence between spot and future prices in the WTI oil markets, leading to a super contango market dynamic as oil storage space in Cushing, Oklahoma dwindled and was insufficient to account for the excess supply expected to be delivered pursuant to the WTI May 2020 futures contract and that as a result, UCO could not continue to pursue the passive investment strategy represented in the Registration Statement, causing its results to significantly deviate from its purported benchmark.
Those who purchased shares of ProShares Ultra Bloomberg Crude Oil (NYSEArca: UCO) have certain options and should contact the Shareholders Foundation.
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