Proshares Ultra Financials Fund (Symbol: UYG)
Class Action Filed By Gilman and Pastor, LLP
ProShares Ultra UYG Lawsuit
GILMAN AND PASTOR LLP FILES CLASS ACTION LAWSUIT ON BEHALF OF INVESTORS AGAINST PROSHARES’ ULTRA FINANCIALS FUND
(AMEX: UYG) AND ULTRASHORT OIL AND GAS FUND (AMEX: DUG)
Gilman and Pastor LLP filed two class action lawsuits on October 23, 2009 in the United States District Court for
the Southern District of New York, on behalf of all persons who purchased or otherwise acquired shares in the Ultra
Financials ProShares Fund (the “UYG Fund”) (AMEX: UYG) and UltraShort Oil and Gas Fund (the “DUG” Fund) (AMEX: DUG)
(collectively “the Funds”), exchange-traded funds (“ETFs”) offered by ProShares Trust (“ProShares”), pursuant or
traceable to ProShares’ false and misleading Registration Statement, Prospectuses, and Statements of Additional
Information (collectively, the “Registration Statement”) issued in connection with the Funds’ shares (the
“Class”). The Class is seeking recovery for investors under Sections 11 and 15 of the Securities Act of 1933
(the “Securities Act”).
The complaints name ProShares; ProShare Advisors LLC, SEI Investments Distribution Co., Michael L. Sapir, Louis M.
Mayberg, Russell S. Reynolds, III, Michael Wachs, and Simon D. Collier, as Defendants (collectively,
“Defendants”). ProShares sells its Ultra and UltraShort ETFs as “simple”
directional plays. As alleged, the products are defective and do not perform
in accordance with reasonable investor expectations.
The UYG Fund is one of ProShares’ Ultra ETFs. The UYG Fund seeks investment results that correspond to twice (200%)
the daily performance of the Dow Jones U.S. Financials Market Index (“DJUSFI”), which measures the performance of
the financials industry of the U.S. equity markets. For example, the UYG Fund
is supposed to deliver double the daily return of the DJUSFI, which increased approximately 1.47 percent from
January 2, 2009 through July 31, 2009, ostensibly creating a profit for investors who anticipated an increase in
the performance of the financial markets. In other words, the UYG Fund should have appreciated
by 2.9 percent during this period. However, the UYG Fund actually fell approximately 25 percent during this
period.
The DUG Fund is one of ProShares’ UltraShort ETFs. The DUG Fund seeks investment results that correspond to twice
(200%) the inverse (opposite) of the daily performance of the Dow Jones Oil and Gas Index (“DJOGI”), which measures
the performance of the energy sector of the U.S. equity markets. For example, the
DUG Fund is supposed to deliver double the inverse return of the DJOGI, which fell approximately 37 percent from
January 2, 2008 through December 17, 2008, ostensibly creating a profit for investors who anticipated a decline in
the performance of the U.S. equity markets. In other words, the DUG Fund should have appreciated by 74
percent during this period. However, the DUG Fund actually fell approximately 30 percent during this period.
The complaints allege the Defendants violated the Securities Act by failing to disclose that the Funds are
altogether defective as a securities product and as directional investment play. Defendants failed to
disclose the following risks in the Registration Statement:
(1) if the Funds shares were held for a time period longer than one day, the likelihood of catastrophic losses were
substantial;
(2) the extent to which performance of the Funds would inevitably diverge from the performance of the Index —i.e.,
the probability, if not certainty, of spectacular tracking error;
(3) the severe consequences of high market volatility on the Funds’ investment
objective and performance; and
(4) the severe consequences of inherent path dependency in periods of high market
volatility on the Funds’ performance.
If you purchased or otherwise acquired shares in the DUG Fund or UYG Fund and
either lost in excess of $200,000. or still hold the shares, you may wish to
join in the action.
Appropriate papers must be filed by no later
than November 23, 2009.
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