Green & Schafle has opened an investigation into the LJM Preservation and Growth fund, which was forced to cease trading and shut down after volatility in February caused dramatic losses.
LJM Fund Suffered Huge Losses During Volatile Market
The LJM fund, managed by Chicago-based LJM Parnters, dropped 50% twice over a two day period for losses of more than 80% during severe market volatility that saw the VIX or Volatility Index soar.
In March, LJM announced that it would be forced to shut down the fund altogether, infuriating already irate investors who may claim approximately $20 million in losses. It appears that investors will be forced to file lawsuits against the collapsed fund if they have any hope of recovering their money. Many investors in LJM Preservation and Growth have already collected into groups in order to pursue litigation against LJM Partners and other related parties. These groups include individual investors, investment advisors acting on behalf of clients, and wealthy families.
What Happened to LJM Preservation and Growth?
Launched in 2006, LJM morphed into a mutual fund in early 2013 with three share classes (LJMAX, LJMCX, and LJMIX).
According to the firm’s literature, the fund invested in ‘long and short options on the S&P 500 Index futures that seek to profit, primarily, from the volatility premium—the spread between implied and realized volatility.’
Ironically, it was this very volatility earlier this year that caused the fund to implode. Investors are also angry because according to the product's literature, it sought to "preserve capital, particularly in down markets." Irate investors are now suing the fund for "false and misleading statements" in the registration and prospectus documents.
