ProShares this week got some good news from the United States District Court for the Southern District of New York, which dismissed, in its entirety, the class action lawsuit filed against the firm in 2009.
Specifically, the court rejected the plaintiffs' claim that certain risks associated with holding leveraged and inverse ETFs for periods longer than one day were omitted from the disclosures set forth in the registration statements.
In his order dismissing the case, Judge John Koeltl ruled that the registration statements accompanying ProShares leveraged and inverse ETFs stated "in plain English" their daily performance objectives and clearly disclosed the possibility that "the ETFs' value could diverge significantly from the underlying index when the ETFs were held for longer than one day." Judge Koeltl's ruling concluded that ProShares disclosures "addresse[d] the relevant risk directly" in a way that any "reasonably prudent investor would have understood."
"We have maintained since the beginning of this case that the allegations were wholly without merit, and we are pleased that the claims have been dismissed in their entirety," stated Amy Doberman, ProShares' General Counsel.
"ProShares has demonstrated a long-standing commitment to educating investors about our products and their risks and benefits, so it is gratifying that Judge Koeltl's ruling rests on the strength and quality of our disclosures."