Securities Investigation on Behalf of Purchasers of Shares of the LJM Preservation and Growth Fund Class I From February 28, 2015 Through February 7, 2018
Kehoe Law Firm, P.C. is conducting a securities investigation on behalf of purchasers of shares of the LJM Preservation and Growth Fund Class I (LJMIX) from February 28, 2015 through February 7, 2018, both dates inclusive.
The LJMIX mutual fund, which is marketed and sold as aiming “to preserve capital, particularly in down markets (including major market drawdowns), through using put option spreads as a form of mitigation risk” suffered a massive loss, steeply declining from a closing price of $9.82 on February 2, 2018 to a closing price of $1.94 on February 7, 2018, a loss of approximately 80%.
Following the massive loss, the LJM Preservation and Growth Fund announced in an SEC filing that “[e]ffective February 7, 2018, the LJM Preservation and Growth Fund . . . is closed to all new investments, with the exception of dividend reinvestments, and the Fund’s transfer agent will not accept orders for purchases of additional shares of the Fund, either from current Fund shareholders or from new investors.”
For additional information, see the Reuters article, “U.S. fund that lost most of its value shuts doors to new investment.”
Class Action Filed on Behalf of LJMIX Investors
On February 9, 2018, a class action lawsuit was filed on behalf of LJMIX investors alleging that the defendants violated provisions of the Securities Act by issuing false and misleading statements to investors. Allegedly, the LJM defendants made false and/or misleading statements or failed to disclose that LJMIX was not focused on capital preservation and left investors exposed to an unacceptably high risk of catastrophic losses. Further, it is alleged that the LJM defendants violated the law by failing to disclose that LJMIX had not taken appropriate steps to preserve capital in down markets. The class action lawsuit is attempting to recover damages for LJMIX investors under the federal securities laws.
LJM Preservation and Growth Fund
LJM is described as a class of mutual fund pitched as bringing hedge fund-like strategies to a broader swath of investors. It used options to bet on markets remaining calm and told investors that the strategy offered an alternative to traditional stock and bond investing.
According to media reports, “The [portfolio manager] described to us several processes he had in place at the open-end fund that would limit losses,” said Gretchen Rupp, an analyst at Morningstar. “We discussed the risk management process with the PM and their risk officer at length. Clearly, the process failed.”
The fund had proved popular in recent months, attracting more than $100 million in new cash in December alone, according to Morningstar data.
If you purchased, or otherwise acquired, shares of the LJM Preservation and Growth Fund Class I (LJMIX) from February 28, 2015 through February 7, 2018, both dates inclusive, and have questions or concerns, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].