Investors have filed a lawsuit against U.S. mutual fund LJM Preservation and Growth Fund, an $800-million fund that lost four-fifths of its value and shuttered earlier this year. LJM relied heavily on a strategy that bet on low or falling volatility.
In the complaint, investor Leonard Sokolow said that he owned shares of LJM Preservation and Growth Fund. The complaint states that the mutual fund left investors exposed to a high risk of catastrophic losses and did not focus on capital preservation.
LJM Preservation and Growth Fund Experiences Losses
LJM was marketed to investors seeking lower risk and moderate growth through a conservative strategy that would preserve capital and avoid the massive risks of aggressive hedge funds seeking greater returns. As a result of the fund’s offering documents, we believe that LJM investors were led to believe that their money was safely invested.
According to the complaint, LJM made false and misleading statements and/or failed to disclose material information in the “Offering Materials” issued in connection with the sale of Preservation Fund shares to investors. Despite marketing to investors that the fund would “preserve capital, particularly in down markets” the fund, in practice, was not invested in a way that would preserve capital. The fund actually was massively exposed to volatility risk.
This misrepresentation was exposed when the value of the LJM Preservation Fund shares dropped 80% in just two days during a period of market volatility. Furthermore, the fund was found to have made enormous bets that would expose investors to risk even in moderate down markets.
The complaint alleged that the net asset value (“NAV”) of Preservation Fund shares was artificially inflated to as high as $11.47 per share during the Class Period.
About LJM Preservation and Growth Fund
LJM Preservation and Growth Fund was run by Anthony Caine and Anish Parvateneni. In 2017, the LJM fund took in $393 million in new cash from investors despite fees as high as 3.34 percent a year.
Have You Lost Money Investing with LJM Preservation and Growth Fund?
If you lost money in the LJM Preservation and Growth Fund or you have experienced investment losses as a result of your stockbroker or brokerage firm, contact an experienced investment fraud attorney today.
We believe that investors who pursue a FINRA arbitration claim to recover their investment losses from the brokerage firm then the fund likely will achieve a faster and better result than simply relying on the class action to generate a financial recovery.
Speak with an Investment Fraud Attorney
Our AV-rated* lawyers have extensive experience handing FINRA arbitration claims involving hedge fund losses and we will aggressively pursue claims to recover your investment losses. We’ve recovered more than $100 million in assets lost to investment fraud and stockbroker misconduct.
If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. represent individual and institutional investors who have lost money as a result of investment fraud or stockbroker misconduct.