Have You Traded Volatility Index Futures OR Volatility Index Options Contracts on the Chicago Board Options Exchange (“CBOE”) or Cboe Futures Exchange Between January 1, 2011 – Present?
Have You Held VIX Futures or VIX Options Contracts Through Settlement or Non-Expiring VIX Futures or VIX Options Contracts on a Day the Settling VIX Futures Contracts Settled?
If so, Kehoe Law Firm, P.C. is investigating whether the anti-manipulation provisions of the Commodity Exchange Act were violated through the intentional manipulation of the final settlement price of VIX futures and VIX options contracts linked to the Cboe Volatility Index® (VIX®), “a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices.”
A recently filed class action complaint alleged that from 2011 to the present, the as of yet unknown defendants caused an artificial monthly final settlement price of expiring VIX contracts. The defendants caused an artificial settlement price, allegedly, by placing manipulative S&P 500® Index (SPX) options orders that were intended to cause artificial VIX contract settlement prices in the expiring contracts. The result of this conduct was a significant price spike either up or down from the previous day’s closing price. The manipulative scheme also, allegedly, impacted non-expiring VIX contracts and the VIX. According to the complaint, filed in United States District Court for the Northern District of Illinois, Eastern Division, the manipulative scheme’s impact dissipated shortly thereafter following a period of trading. Moreover, extreme price moves and reversions back, like those exhibited in VIX contracts, are a sign of manipulation. (For more information about the Cboe Volatility Index® (VIX®) and the relationship of the SPX and VIX Index®, please click here.)
According to CNN Money, the “lawsuit . . . claims traders manipulated the value of VIX options and futures by making bets on the S&P before VIX settlement auctions. The unidentified plaintiffs want to subpoena the Chicago Board Options Exchange, which it says can identify traders and bets that contributed to ‘hundreds of millions of dollars in losses for investors across the country.’”
If you traded VIX futures or VIX options contracts on the CBOE or Cboe Futures Exchange between January 1, 2011 through the present OR held VIX futures or VIX options contracts through settlement or non-expiring VIX futures or VIX options contracts on a day the settling VIX futures contracts settled, your rights under federal law may have been violated.
If you wish to speak to an attorney about your potential legal rights or claims, please contact Kehoe Law Firm, P.C., John Kehoe, Esq., [email protected], (215) 792-6676, Ext. 801 or e-mail [email protected].