Did you lose money investing in LJM Preservation Growth Fund (LJMAX, LJMCX, LJMIX)?
Galvin Legal, PLLC is launching an investigation on behalf of investors who suffered losses investing in LJM Preservation Growth Fund (LJMAX, LJMCX, LJMIX) at the recommendation of their financial advisor. If you suffered losses investing in the investment, then Galvin Legal, PLLC may be able to help you recover your losses in a Financial Industry Regulatory Authority (“FINRA“) arbitration claim against the brokerage firm that recommended the investment.
LJM Partners is the firm that operates the LJM Preservation Growth Fund (LJMAX, LJMCX, LJMIX) mutual fund. The investment “seeks capital appreciation and capital preservation with low correlation to the broader U.S. equity market. Under normal circumstances, the und invests primarily in purchased (a.k.a. ‘long’) and sold (a.k.a. ‘short’) call and put options on Standard & Poor’s 500 Futures Index (‘S&P’). The fund seeks to achieve its investment objectives by capturing gains on options sold on S&P futures contracts that can be purchased (‘closed’) at a later date for a lower price than the price realized when originally sold,” according to U.S. News & World Report.
If you suffered losses and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.
Summary Points
1. The LJM Preservation Growth Fund (LJMAX, LJMCX, LJMIX) was launched in January 2013 and offered three different share classes.
2. As of October 31, 2017, the LJM Preservation Growth Fund (LJMAX, LJMCX, LJMIX) had net assets of $768 million.
3. The fund placed massive bets using complicated options strategies that depended on the market remaining calm and not experiencing volatility.
4. LJM Preservation Growth Fund (LJMAX, LJMCX, LJMIX)’s prospectus states that the objective of the fund is “capital appreciation and capital preservation with low correlation to the broader U.S. equity market.” It appears to be in direct conflict with the investment strategies that were executed.
5. In two days, February 5 and 6 2018, investors in LJM Preservation Growth Fund (LJMAX, LJMCX, LJMIX) lost 80% of the value of their investment or perhaps $600 million in investor money.
LJM Preservation Growth Fund (LJMAX, LJMCX, LJMIX) is a high-risk alternative mutual fund that suffered from the VIX [volatility index] spike. According to Barron’s, “the $772 million alternative mutual fund’s share price plummeted from $9.67 to $4.27—a 55.8% decline. To make matters worse, the fund (ticker: LJMAX) didn’t report the loss until late the following day, so shareholders were in the dark as to what happened. And then the fund suffered another, 54.6% fall to $1.94 a share on Feb. 6—a two-day total decline of 80%. “It may be the biggest two-day drop for a mutual fund ever,” says Gretchen Rupp, a Morningstar analyst who covers the fund.”
Many investors have reportedly bought into LJM Preservation Growth Fund (LJMAX, LJMCX, LJMIX) on the recommendation of an investment advisor who, in turn, employed supposed third-party tactical mutual fund allocation through a “sleeves” strategy. The “sleeves” strategy has reportedly been espoused by Horter Investment Management (“Horter”) and marketed to approximately 250 investment advisor representatives. About 210 RIA firms have reportedly established relationships with Horter. Headquartered in Cincinnati, OH, Horter is a SEC Registered Investment Adviser (“RIA”) formed in 1991 with a stated goal of “risk mitigation, capital preservation and minimizing drawdowns so that people don’t get hurt with severe corrections or a bear market.” Horter reportedly offers services as a third-party advisor to other investment advisers
If you suffered losses and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.
Due Diligence Requirement
FINRA requires brokerage firms to conduct due diligence on investments and to conduct a suitability analysis when recommending securities to a customer that takes into account the customer’s knowledge and experience. FINRA Rule 2111(a) states that “a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile. A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”
Rule 2111 is composed of three main obligations: reasonable-basis suitability, customer-specific suitability, and quantitative suitability. Brokerage firms that fail to conduct adequate due diligence on investments they recommend, such as LJM Preservation Growth Fund (LJMAX, LJMCX, LJMIX), or that make unsuitable recommendations can be held responsible for the customer’s losses in a FINRA arbitration claim.
If you suffered losses and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.
Request a Free Consultation with a Securities Attorney
If you suffered losses investing in LJM Preservation Growth Fund (LJMAX, LJMCX, LJMIX) and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.
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Galvin Legal, PLLC is a national securities arbitration, securities mediation, securities litigation, securities fraud, securities regulation and compliance, and investor protection law practice. For more information on Galvin Legal, PLLC and its representation of investors, please visit www.galvinlegal.com or call 1-800-405-5117.