LJM Partners, out of Chicago, Illinois, saw massive losses to its LJM Preservation and Growth Fund in February, losing over 82 percent of the Fund’s value in a single week. The Fund held risky positions based on the CBOE Volatility Index, or VIX, which rose to near seven-year highs. The fund was overexposed to volatility risk, suffering catastrophic losses while the market downturn was approximately 5%.
LJM marketed the Fund, however, as “seeking capital appreciation and capital preservation with low correlation to the broader U.S. equity market” and pitched its ability to “preserve capital, particularly in down markets (including major market downturns).”
LJM investors have already filed class-action lawsuits against LJM to attempt to recover their overwhelming losses. Companies like LJM are required to make adequate and accurate disclosures in their marketing materials to allow investors to make informed decisions about their investments. Likewise, brokers recommending the LJM Fund to their clients were obligated to understand the Fund’s features and risks, to disclose those risks to their clients, and to make certain that the Fund was suitable to their clients prior to making a recommendation.
If you or someone you know has lost money or was misled into the purchase of the LJM Preservation and Growth Fund, or a similar fund which suffered extreme losses due to market volatility, please call the Frankowski Firm at 888.741.7503 or fill out this contact form.