April 2018
We are currently reviewing potential claims for investors who suffered losses in LJM Preservation and Growth Fund (LJMIX & LJMCX) securities.
Once close to a billion dollars, the LJM Preservation and Growth Fund lost over 80% of its value in the first week of February 2018 and is closed to further investment, according to filings with the US Securities and Exchange Commission.
The fund was managed by Anish Parvataneni and Anthony Caine. According to the firm website 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.
According to analysts following the fund, the strategy of the LJM Preservation and Growth Fund was to sell naked put options on S&P futures.
Put Option
A “put” option is a contract granting the right to the buyer to sell a security at a specified price (strike price) , allowing the buyer to hedge a position. The seller of a put option is betting the price of the security will remain higher than the strike price of the option. If the seller doesn’t own the security on which the option is written, that is called naked option writing and the downside risk is magnified greatly.
If a downward market adjustment occurs, as it did in the first week of February 2018, losses can be catastrophic. These charts show the dramatic drop in value on two of the LJM funds:
Brokers Have Duty to Make Suitable Recommendations
Brokers have a duty to make suitable recommendations taking into account an investor’s health, age, level of financial sophistication , tolerance for risk and investment objectives. For most retirees, a recommendation to invest in an investment that could experience such a dramatic drop in value would not be suitable. Investors may have been unaware of the risks associated with an investment in the LJM Preservation and Growth Fund, given the apparent misuse of the word “Preservation” .
Losses May be Recoverable
If you have losses in the LJM Preservation and Growth Fund and believe you were misled as to the risks, contact for a no charge consultation us to learn how damages may be recoverable through FINRA arbitration.
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
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