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Wanted: Naive, Gullible Investor who can keep a straight face to be LEAD PLAINTIFF.



September 22, 2009 – Comments (0) | RELATED TICKERS: S , UEM , BIG

I was shocked to notice when I checked in on one of my favorite all time investments that lawyers are looking for a lead plaintiff for a class action suit.   Is nothing sacred? Now I know there are times when CEO's run companies into the ground or give out false information to shareholders. We do need lawyers to go after these bankrupt companies. I don't know why since nothing is left by then for shareholders. If the company is still viable then the suite would just wreck it further and cause the insiders to run with what's left.  But we do need lawyers to get onto these companies!

This mindless attempt to go after my favorite equity whose CEO is above reproach just amazes me. The CFO and other officials are also without blame.  How could a law firm think they can build a case against an equity such as this.

Who am I talking about???   Haven't you heard??

Someone thinks that Direxion Shares ETF Trust should be sued on behalf of anyone who purchased FAZ between November 3, 2008 through April 9, 2009!!!

What are their crimes?

"The complaint alleges the Defendants violated the Securities Act by failing to disclose that the FAZ Fund is altogether defective as a directional investment play. Defendants failed to disclose the following risks in the Company's Registration Statement:"

(1) inverse correlation between the FAZ Fund and the RFSI over time would only happen in the rarest of circumstances, and inadvertently, if at all;

(NOTE:  I've seen the inverse 3x against all of the other financial indexes working almost perfectly, down is down, just 3x Faster. Which part of this wasn't as expected?)

(2) the extent to which performance of the FAZ Fund would inevitably diverge from the performance of the RFSI -- i.e., the probability, if not certainty, of spectacular tracking error;

(Note: Not just any tracking error, a spectacular one!! See Note 1)

(3) the severe consequences of high market volatility on the FAZ Fund's investment objectives and performance;

(Note:  NO warning whatsoever that volatility would affect FAZ?  Why were people investing in it??)

(4) the severe consequences of inherent path dependency in periods of high market volatility on the FAZ Fund's performance;

(Note:  The Consequences?  I'm buying this because I want to be rich 3x FASTER!??)

(5) the role the FAZ Fund plays in increasing market volatility, particularly in the last hour of trading;

(Note: Yep, everyone knew if the market went up that FAZ would readjust up and if it went down it would readjust down at precisely 3:45, so they rebalanced at 3.30 for awhile. But FAZ caused the market volatility?!! Wow!)

(6) the consequences of the FAZ Fund's daily hedge adjustment always going in the same direction as the movement of the underlying index, notwithstanding that it is an inverse leveraged ETF;

(Note: Wow, that it did exactly what investors were buying it for??  It moves in the same direction!!!??  Who would have figured??)

(7) the FAZ Fund causes dislocations in the stock market; and

(Note: Wow!  Really, the entire stock market!!! Maybe even the temperal vorex??)

(8) the FAZ Fund offers a seemingly straightforward way to obtain desired exposure, but such exposure is not attainable through the FAZ Fund.

(Note:  Desired Exposure.  Financials go down like the dogs they are if the government leaves them alone and I get rich?  Financial go up even though I don't think they should and I lose my shirt?  That's not the desired exposure???)

WOW! I just can't believe no one warned the buyer about #3 in particular!!!   The same buyers who weren't warned must be the ones who need warning labels on common household products such as drinking this poisonous household cleaner unless mixed properly with the right quantity of vodka could cause your stomach lining to dissolve.

The Law firm is looking for a lead plaintiff.  I'm not sure why they just don't cover two suites at the same time.  Direxion should be sued by those who bought FAS in the same period for causing them to have a large capital gain that they now must report.

Can we sue them for lost CAPS points?  Maybe GV or ASP would sign up to be the lead plaintiff??

TSIF (The Sky Is (not) Falling,  unless you've been holding FAZ long!





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