NEW YORK–(BUSINESS WIRE)–Robbins Geller Rudman & Dowd LLP (https://www.rgrdlaw.com/cases-us-oil-fund-class-action-lawsuit.html) today announced that it filed a class action seeking to represent purchasers of securities of United States Oil Fund, LP (NYSEArca:USO) during the period between March 19, 2020 and April 28, 2020 (the “Class Period”). This action was filed in the Southern District of New York and is captioned Lucas v. United States Oil Fund, LP, No. 20-cv-4740.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased United States Oil Fund, LP (“USO” or the “Fund”) securities during the Class Period to seek appointment as lead plaintiff in the USO class action lawsuit. A lead plaintiff acts on behalf of all other class members in directing the USO class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the USO class action lawsuit. An investor’s ability to share in any potential future recovery of the USO class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff in the USO class action lawsuit, you must move the Court no later than 60 days from today. If you wish to discuss the USO class action lawsuit or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Brian E. Cochran of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at email@example.com. You can view a copy of the complaint as filed at https://www.rgrdlaw.com/cases-us-oil-fund-class-action-lawsuit.html.
The USO class action lawsuit charges USO and certain of its officers and directors with violations of the Securities Exchange Act of 1934. USO is an exchange traded fund (“ETF”) purportedly designed to track the daily changes in percentage terms of the spot price of West Texas Intermediate (“WTI”) light, sweet crude oil delivered to Cushing, Oklahoma. Because retail investors are generally not equipped to buy and sell barrels of oil or authorized to trade oil futures, ETFs such as USO provide one of the primary means by which such investors can gain exposure to fluctuations in oil prices.
The complaint alleges that during the Class Period, defendants stated that USO would achieve its investment objective by investing substantially all of its portfolio assets in the near month WTI futures contract. However, unbeknownst to investors, extraordinary market conditions in early 2020 made USO’s purported investment objective and strategy unfeasible. Oil demand fell precipitously as governments imposed lockdowns and businesses halted operations in response to the coronavirus pandemic. In addition, in early March 2020, Saudi Arabia and Russia launched an oil price war, increasing production and slashing export prices in a bid to increase the global market share of their domestic petrochemical enterprises. As excess oil supply increased and oil prices waned, the facilities available for storage in Cushing, Oklahoma approached capacity, ultimately causing a rare market dynamic known as “super contango” in which the futures prices for oil substantially exceeded the spot price. At the same time, retail investors began pouring hundreds of millions of dollars into USO in an attempt to “buy the dip,” believing (correctly) that the price of oil would rebound as economies exited lockdown periods and the Russia/Saudi oil price war ended. Because of the nature of USO’s investment strategy, these converging factors caused the Fund to suffer exceptional losses and undermined the Fund’s ability to meet its ostensible investment objective.
According to the complaint, defendants, as the creators, issuers and operators of the largest oil-related ETF in existence and active market-making players in the complex commodities and futures markets that determined the Fund’s performance, possessed inside knowledge about the negative consequences to the Fund as a result of these converging adverse events. However, rather than disclose the known impacts and risks to the Fund as a result of these exceptional threats, defendants instead commenced an offering of USO shares in March 2020, ultimately selling billions of dollars’ worth of USO shares to the market. Although the offering increased the fees payable to defendants, it also exacerbated the undisclosed risks to the Fund by magnifying trading inefficiencies and causing USO to approach position and accountability limits as a result of the Fund’s massive positions in the WTI futures market.
Ultimately, the Fund suffered billions of dollars in losses and was forced to abandon its investment strategy. Through a series of rapid-fire investment overhauls, USO was forced to transform from the passive ETF designed to track spot oil prices that defendants had pitched to investors to an almost unrecognizable actively managed fund struggling to avoid a total implosion. In April and May 2020, defendants belatedly acknowledged the extreme threats and adverse impacts that the Fund had been experiencing at the time of the March offering, but which they had failed to disclose to investors.
The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.
Robbins Geller Rudman & Dowd LLP
Brian E. Cochran, 800-449-4900