Wolf Haldenstein Adler Freeman & Herz LLP Commences Class Action Lawsuit on Behalf of Ultra Basic Materials ProShares Fund Investors

lawsuit-filedWolf Haldenstein Adler Freeman & Herz LLP today filed a class action lawsuit in the United States District Court, Southern District of New York, on behalf of all persons who purchased or otherwise acquired the shares of Ultra Basic Materials ProShares Fund (“the UYM Fund”) [NYSE:UYM] (UYM) an exchange-traded fund (“ETF”) offered by ProShares Trust (“ProShares” or the “Trust”), pursuant or traceable to ProShares’ false and misleading Registration Statement, Prospectuses, and Statements of Additional Information (collectively, the “Registration Statement”) issued in connection with the UYM Fund’s shares against ProShares, trustees and the Treasurer of ProShares, the UYM Fund’s investment advisor, its officers and trustees, and the UYM Fund’s principal underwriter, alleging claims pursuant to Sections 11 and 15 of the Securities Act [15 U.S.C. §§77k and 77o] (the “Class”).

The case name is styled Schwack v. ProShares Trust, et al. and the index number is 10-272. A copy of the complaint filed in this action is available from the Court, or can be viewed on the Wolf Haldenstein Adler Freeman & Herz LLP website at www.whafh.com.

ProShares consists of a series of ETFs, including the UYM Fund. ETFs, regulated by the SEC under the Investment Company Act of 1940 (the “1940 Act”), are low-cost funds that track a particular stock index and trade like stock. Actively managed “leveraged” and “inverse” ETFs, such as the UYM Fund, have exploded in popularity over the last few years, offering investors alternate vehicles to take bullish, bearish, and leveraged positions on popular stock indices. Available in a number of different forms, these ETFs have attracted increasingly significant investor assets.

ProShares designs each of its ETFs to correspond to the performance of a daily benchmark-such as the price performance, the inverse of the price performance, or a multiple of the inverse of the price performance-of an index or security. The UYM Fund, in particular, seeks investment results that correspond to twice (200%) daily performance of the Dow Jones U.S. Basic Materials Index (“DJUSBM”). The UYM Fund is mandated to take positions in securities and/or financial instruments that, in combination, should have similar daily return characteristics as 200% of the daily return of the DJUSBM.

As ProShares knows, investors do not view ETFs as day trading investment vehicles and did not day-trade the UYM Fund. Moreover, it is virtually economically impossible for all UYM Fund purchasers to sell out of their positions at the end of one day.

The Complaint alleges that the UYM Fund is not a simple investment vehicle, did not go up when its benchmark index went up, and did not perform as described over a period longer than one trading day. As a result, even on a daily basis, investors in the UYM Fund have been shocked to learn that their supposedly safe play on the basic materials sector has caused them substantial losses.

In ignorance of the false and misleading nature of the statements described in the complaint, plaintiff and the other members of the Class relied, to their detriment, on the integrity of the market price of the UYM Fund shares. Had plaintiff and the other members of the Class known the truth, they would not have purchased said shares, or would not have purchased them at the inflated prices that were paid.

If you purchased UYM Fund shares during the Class Period, you may request that the Court appoint you as lead plaintiff by March 15, 2010. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as “lead plaintiff.” Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Wolf Haldenstein, or other counsel of your choice, to serve as your counsel in this action.

Wolf Haldenstein has extensive experience in the prosecution of securities class actions and derivative litigation in state and federal trial and appellate courts across the country. The firm has approximately 70 attorneys in various practice areas; and offices in Chicago, New York City, San Diego, and West Palm Beach. The reputation and expertise of this firm in shareholder and other class litigation has been repeatedly recognized by the courts, which have appointed it to major positions in complex securities multi-district and consolidated litigation.

If you wish to discuss this action or have any questions, please contact Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison Avenue, New York, New York 10016, by telephone at (800) 575-0735 (Mark C. Rifkin, Gustavo Bruckner, or Derek Behnke), via e-mail at [email protected] or visit our website at www.whafh.com. All e-mail correspondence should make reference to the UYM Fund.


Wolf Haldenstein Adler Freeman & Herz LLP
Mark C. Rifkin, Gustavo Bruckner, or Derek Behnke
[email protected]


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