A class action has been filed against ProShares for allegedly providing false and misleading information relating to its UltraShort Financials fund.
The filing against ProShares by US law firm Pomerantz Haudek Grossman & Gross
cites "false and misleading registration statement, prospectuses, and statements of additional information."
The fund is an inverse leveraged ETF, seeking investment returns that are two times the inverse performance of the Dow Jones US Financials index, which represents large US banks and insurance companies.
However, the law firm alleges the registration statement filed by ProShares failed to adequately disclose that fund shares should not be held for more than a single trading day and are not an appropriate hedge against a decline in US-based financial stocks.
In September, other US law firms filed class action lawsuits for investors in ProShares short financial and short emerging markets funds, also citing false and misleading prospectuses, registration statements and information.
Gilman and Pastor filed a class action lawsuit on September 2 on behalf of investors with shares in the UltraShort MSCI Emerging Markets ProShares fund.
At the time, the legal firm said the fund was supposed to grow by 104% during the period from January 2 to December 17 2008, although it fell by around 30%.
In addition, the securities law firm Tramont Guerra and Núñez issued a notice on Septmber 4 to investors in the ProShares Advisors UltraShort Financials ETF alleging that ProShares failed to properly structure the ETF to perform in a way which was consistent with the investment prospectus.
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