ProShares Ultra Bloomberg Crude Oil (UCO) 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 UCO provide one of the primary means investors can gain exposure to fluctuations in oil prices.
UCO 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. UCO stated that it would not seek to achieve its stated objective over a period greater than a single day.
However, unbeknownst to investors, extraordinary market conditions in early 2020 made UCO’s purported investment objective and strategy unfeasible. Oil demand fell precipitously as governments imposed lockdowns and businesses halted operations in response to the COVID-19 pandemic. 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.
UCO quickly deteriorated, as a result of the nature and extent of Defendants’ fraud being revealed to investors and the market. Moreover, on April 21, 2020, UCO held a 1:25 reverse split for its shares.
Ultimately, UCO suffered billions of dollars in losses and was forced to abandon its investment strategy. Through a series of rapid-fire investment overhauls, UCO was forced to transform from the passive ETF into an actively-managed fund struggling to avoid a total implosion. In April and May 2020, Defendants belatedly acknowledged the extreme threats and adverse impacts UCO had been experiencing at the time of the March offering, but which they failed to disclose to investors in a timely manner.
Investors who have lost money on their UCO shares may be able to recover some of those losses, and should contact us using the form below.