leveraged- and inverse-index ETFs are under legal fire. Stull, Stull & Brody
just two filed two class action lawsuits against ProShares
, the New York City-based law firm revealed Friday.
The first suit
claims that the ProShares Ultra Financials Fund
(ticker: UYG), which aims to double the performance of the Dow Jones U.S. Financial Index
, did not properly disclose risks to investors. The second complaint
makes similar claims about the UltraShort Oil and Gas Fund
A spokesperson for ProShares was not immediately able to comment on the suits.
According to the Ultra Financial Fund complaint, "if UYG Fund shares were held for a time period longer than one day, the likelihood of catastrophic losses was huge." The complaint also claimed that the UYG Fund did not accurately track its index over time, and thus ProShares did not accurately describe the fund to its investors.
The law firm said it is also considering filing claims against other ProShares leveraged funds.
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