A class action lawsuit over leveraged and inverse exchange-traded funds against ProShares has been dismissed, the company announced today.
ProShares said the suit, filed in 2009, was dismissed yesterday by the U.S. District Court for the Southern District of New York. The court rejected the plaintiffs' claim that certain risks associated with holding leveraged and inverse ETFs for periods longer than one day were omitted from the disclosures set forth in the registration statements, ProShares said in a release.
"We have maintained since the beginning of this case that the allegations were wholly without merit, and we are pleased that the claims have been dismissed in their entirety," said Amy Doberman, ProShares' general counsel.
Judge John G. Koeltl ruled that the registration statements accompanying ProShares leveraged and inverse ETFs stated "in plain English" their daily performance objectives and clearly disclosed the possibility that "the ETFs' value could diverge significantly from the underlying index when the ETFs were held for longer than one day," ProShares said.