A judge has dismissed a class-action suit by investors alleging a manager of leveraged and inverse ETFs didn’t adequately disclose the products’ risks, according to a report.
The lawsuit was filed in August 2009 and relates to ETFs sponsored by ProShares.
In the decision, a New York judge wrote that ProShares was explicit in disclosing the risks involved with investing in its ETFs, Reuters reports.
Leveraged ETFs are designed as trading vehicles rather than long-term investments.
Because the leverage resets on a daily basis, the ETFs will not deliver the targeted leverage for periods longer than one day.
“That the plaintiffs held the ETF shares over long periods of time, despite the language in the registration statement, is not enough to support a cause of action,” the judge wrote in his dismissal, Reuters reported.
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.