LJM Preservation and Growth Fund lost 80 percent of its value betting the wrong way on market turmoil in the first week of February. Now, it has been named in a proposed securities class action alleging the company and its executives lied to investors about its strategy.
The suit seeks to represent a class of investors who held shares in the LJM Preservation and Growth Fund between February 28, 2015, and February 7, 2018.
The fund, which trades as LJMIX, fell 80 percent from February 2nd to February 7th when its strategy of betting on continued market stability backfired during a spike in the so-called fear index midweek. LJMIX plunged from $9.82 to $1.94 per share during the period.
The suit alleges misstatements by LJM Partners and its affiliates about what the funds’ priorities and investment strategies were. In a series of registration statements and other fund documents, the managers professed to be focused on capital preservation, but instead, the fund’s investors were exposed to serious risk in the market.
The complaint alleges violations of Sections 11, 12 and 15 of the Securities Act of 1933, which cover civil liabilities on account of a false registration statement, civil liabilities in connection with prospectuses and communications, and liability of controlling persons.
Representatives for the parties didn’t immediately respond to requests for comment on Friday.
The case is Leonard Sokolow v. LJM Funds Management Ltd. et al., case number 1:18-cv-01039, in the U.S. District Court for the Northern District of Illinois.