| Company: | Direxion Energy Bear |
| Ticker Symbol: | ERY |
| Class Period: | Nov-5-08 to Apr-9-09 |
| Date Filed: | Jan-13-10 |
| Lead Plaintiff Deadline: | Mar-14-10 |
| Court: | Southern District of New York |
| Allegations: | |
Direxion Shares consists of a series of ETFs, including the Energy Bear Fund. ETFs, regulated by the SEC under the Investment Company Act of 1940 (the "1940 Act"), are low-cost funds that track a particular stock index and trade like stock. Actively managed, or so-called "leveraged" and/or "inverse" ETFs, such as the Energy Bear Fund, have exploded in popularity over the last few years, offering investors alternate vehicles to take bullish, bearish, and leveraged positions on popular stock indices. Available in a number of different forms, these ETFs have attracted increasingly significant investor assets.
The Energy Bear Fund seeks investment results that correspond to three times (300%) the inverse (or opposite) of the daily performance of the Russell 1000(R) Energy Index ("Russell Energy Index"), which fell approximately 11% from November 5, 2008 through April 9, 2009, ostensibly creating a profit to investors who anticipated a decline in the U.S. energy market. However, the Energy Bear Fund actually fell approximately 54% during this.
The Complaint alleges that given the spectacular tracking error between the performance of the Energy Bear Fund and its benchmark index, the fact that Plaintiff and the Class sought to protect their assets by investing their monies on the correct directional play has been rendered meaningless. The Energy Bear Fund is, therefore, the equivalent of a defective product. The Energy Bear Fund did not do what it was designed to do, represented to do, or advertised to do.
Direxion Shares' Registration Statement did not disclose that the Energy Bear Fund is altogether defective as a directional investment play; it did not track three times the inverse of the Russell Energy Index on a daily basis, nor for periods longer than one trading day. In order to sufficiently and accurately disclose this counterintuitive reality, the Registration Statement would have had to clearly explain that, notwithstanding the name of the Energy Bear Fund, the investment objective of the Energy Bear Fund and the purpose of Direxion Shares' ETFs generally, the Energy Bear Fund would perform precisely the opposite of investors' reasonable expectations.
In ignorance of the false and misleading nature of the statements described in the complaint, plaintiff and the other members of the Class relied, to their detriment, on the integrity of the market price of the Energy Bear Fund shares. Had plaintiff and the other members of the Class known the truth, they would not have purchased said shares, or would not have purchased them at the inflated prices that were paid.
If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
