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Independent Broker Dealer Consortium

Potential Claims Related to LJM Preservation and Growth Fund Collapse

In recent months, Winget Spadafora & Schwartzberg, LLP (“WSS”) has been engaged by numerous insurance E&O carriers, broker-dealers and their registered representatives, and registered investment advisors and their investment advisor representatives across the country to assist in the defense of claims related to the collapse of the LJM Preservation and Growth Fund (“LJM Fund”) on February 5 and 6, 2018.

As described in its prospectus, the LJM Fund was designed to be a highly liquid investment that was uncorrelated to the equities market and sought to deliver better-than-bond returns in a low interest rate environment. Through the use of long and short options on the S&P 500, the fund attempted to profit from the fact that actual stock market fluctuations frequently prove to be less dramatic than anticipated by investors. At its heart, the LJM Fund’s strategy looked three months into the future and attempted to estimate where the S&P 500 index would likely be at the end of the period.

The LJM Fund’s share price plummeted from $9.67 to $4.27—a 55.8% decline on February 5, 2018 during a period of extreme market volatility. To make matters worse, the fund didn’t report the loss until late the following day, so shareholders were in the dark as to what happened. And then the fund suffered another 54.1% fall to $1.96 a share on Feb. 6—a two-day total decline of 79.7%. Subsequent to the collapse, the fund liquidated its remaining assets and closed its doors. At least three class actions have been filed by LJM Fund investors in the U.S. District Court for the District of Illinois against LJM Funds Management and other Defendants including LJM’s founder and Chairman and Chief Portfolio Manager. The class action claims arise out of alleged violations of the Securities Act of 1933 and misrepresentations in the registration materials regarding risk exposure and volatility through leveraged options.

The LJM Fund was sold by registered investment advisors and their investor advisor representatives. WSS is also defending arbitrations against broker-dealer firms who may not have sold the LJM Fund but whose registered representatives sold the fund through unaffiliated RIA’s. WSS has already begun working with leading expert witnesses who have preliminarily concluded that there were no readily apparent signs prior to the collapse of the LJM Fund which would have alerted the market to the fund’s collapse.

Should you require any assistance in the defense of any claim related to the LJM Fund, please contact one of the following partners at Winget, Spadafora & Schwartzberg, LLP who are leading the firm’s effort in the defense of LJM Fund related claims in arbitration and in courts across the United States.

A complete description of our practice areas is available online at

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