If you are have suffered losses in LJM Preservation and Growth Fund, you may be able to pursue recovery of your losses through FINRA arbitration or securities litigation. Please call Kons Law Firm at (860) 920-5181 for a FREE, NO OBLIGATION consultation to discuss your investment loss recovery options.
LJM Preservation and Growth Fund Investors Can Pursue Recovery of their Losses
If you have suffered losses in the LJM Preservation and Growth Fund, you may be able to pursue recovery of those losses through FINRA arbitration or securities litigation due to the lack of due diligence on the LJM Preservation and Growth Fund, or an inappropriate level of risk that you were exposed to in the LJM Preservation and Growth Fund.
According to recent news reports, the LJM Preservation and Growth Fund (LJMAZ, LJMCX, LIMIX) recently collapsed and approximately 82% of its value as a result of recent volatility in the equity markets. The LJM Funds relied heavily on a strategy that is designed to profit from calm markets. The LJM Preservation and Growth Fund, which once had $800 million in assets, ultimately closed to new capital as a result of this staggering loss.
Short volatility strategies, selling options and collecting premium, have been critically described as a highly risky strategy that can generate very good risk-adjusted returns until volatility spikes – which creates the potential for a fund employing this strategy to lose most of their assets if not properly hedged.
The LJM Preservation and Growth Fund had been run by Anthony Caine, a veteran of the 1990s technology boom who later founded LJM, and Anish Parvataneni, a former trader for well-known investor Ken Griffin’s Citadel. According to Thompson Reuters, despite having fees exceeding 3.3%, the LJM Preservation and Growth Fund took in $393 million in new cash from investors in 2017, which was its best-ever sales since launching in 2013.
Brokerage Firms Had a Duty to Conduct Proper Due Diligence on LJM Preservation and Growth Fund
Securities broker-dealers have a regulatory duty to ensure that any investments they recommend to customers are suitable for them. This is especially important for brokerage firms selling complex investments like the LJM Preservation and Growth Fund.
FINRA Rule 2111 (NASD Rule 2310) requires that securities broker-dealers to conduct a suitability analysis when recommending securities to investors that will take into account the investors’ knowledge and experience. The brokerage firm must make reasonable efforts to gather and analyze information about the customer’s other holdings, financial situation and needs, tax status, investment objectives and such other information that would enable the firm to make its suitability determination.
In addition to ensuring that securities are suitable for its customers on an individual level, FINRA Rule 2111 (NASD Rule 2310) also states that a securities broker must have reasonable grounds to believe that a recommendation to purchase, sell or exchange a security is suitable for the customer. This “reasonable-basis” suitability requirement means that in the context of complex investments like the LJM Preservation and Growth Fund, or any of the LJM Funds, brokerage firms have a duty to conduct due diligence on:
- The LJM Preservation and Growth Fund and its fund managers;
- The business prospects of the LJM Preservation and Growth Fund;
- The investment strategy of the LJM Preservation and Growth Fund;
- The claims being made by the LJM Preservation and Growth Fund; and
- The potential risks of investing clients in the LJM Preservation and Growth Fund.
Brokers and brokerage firms “may not rely blindly upon the fund manager for information concerning the fund,” nor may it rely on the information provided by the fund manager lieu of conducting its own reasonable investigation.
LJM Preservation and Growth Fund Investors May Be Able to Pursue Recovery of their Losses through FINRA Arbitration
Fortunately for investors, they may be able to recover their investment losses in the LJM Preservation and Growth Fund through FINRA arbitration or securities litigation against the stockbroker, brokerage firm, or investment adviser that recommended the LJM Preservation and Growth Fund to them.
If you are have suffered losses in LJM Preservation and Growth Fund (LJMAZ, LJMCX, LIMIX) or any other LJM Fund, you may be able to recover your losses through FINRA arbitration or securities litigation. Please call Kons Law Firm at (860) 920-5181 for a FREE, NO OBLIGATION consultation to discuss your investment loss recovery options.
Kons Law Firm represents investors nationwide in securities arbitration and litigation matters. To learn more about the Firm’s securities litigation and FINRA arbitration practice, please visit www.investmentfraudattorneys.com.
