Articles Tagged with LJMIX

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses in the LJM Preservation and Growth Fund. When broker-dealers sell you investments, they are responsible for fully informing you of the risks at the point of sale. When they fail to give you an honest, transparent disclosure on what they are selling – and the investments tank — you may have an arbitration case that you can pursue to get your money back.

Cambridge Investment Research, Merrill Lynch, and other brokerage firms sold a mutual fund called the LJM Preservation and Growth fund to their customers. The fund’s “value plummeted 80% over two days in early February 2018, after brokers in the previous two years sold $18 million of its shares to more than 550 customers, prompted by sales calls in May 2016 from an LJM wholesaler,” the securities regulator FINRA stated. “The fund was liquidated and dissolved in March 2018.”

What made the fund so volatile that led to its demise? It employed a risky strategy called “uncovered options,” but failed to tell investors that it was a highly complex vehicle prone to catastrophic losses.

AdobeStock_41845221-300x212If you lost money because of a recommendation by Horter Investment Management, please call our Chicago-based law firm today. We are securities attorneys who help clients bring claims against firms like Horter Investment Management. Horter sold shares of LJMIX as part of its “sleeves” investment philosophy. Notwithstanding the name of the fund, LJMIX was not focused on capital preservation and left investors exposed to an unacceptably high risk of catastrophic losses. This occurred on February 5th, 2018, when the S&P 500 fell 4.6% and by the close of trading on February 6th, LJMIX had lost 88%. It was an inaptly named Fund, as it actually pursued the opposite of a capital preservations and growth strategy, and was implementing an options trading strategy with unlimited downside (in other words, no preservation) and limited upside (no growth). A professional investment advisor like Horter must understand the options strategy employed by a fund like LJMIX and not simply relied on the name of the fund when it selected it as part of the firm’s “sleeves” strategy.

Hundreds of clients of the Cincinnati, Ohio-based Registered Investment Advisor (RIA) had LJMIX in their portfolios. This investment was unsuitable for many clients due to its speculative nature, which included the risk of total loss. As a fiduciary investment advisor, Horter had a legal obligation to understand LJMIX prior to selecting it as part of its “sleeves” strategy.

This is not the first time Horter has been in hot water in connection with a mutual fund. According to an Order Instituting an Administrative Cease and Desist against Horter brought by the Securities and Exchange Commission (SEC) last year, Horter Investment Management was accused of making misstatements to clients concerning F-Squared Investments, Inc. (F-Squared), which materially inflated performance track record for its AlphaSector strategy. These alleged misstatements were made between January 2012 and October 2013, and resulted in a $250,000 fine to Horter.

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