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Question

I bought a short fund in 2008, starting in april for 2 months. It was a short on oil. The spot price of oil fell from $147 to $42. As i was buying the fund price kept falling. The fund knew it was liquidating and still allowed my purchases. The price eventually fell to $00.12 They stole a few thousand dollars from me. They said they sent out a notice, but Ameritrade, my broker never notified me and the neither did the fund, Because i dont think either of us knew about it. I am age 72, destitute now, is there anything anyone can do to help me? Neil Roberts

Submitted: 17 days and 6 hours ago.
Category: Legal
Value: $28
Status: CLOSED
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State/Country relating to Question: North Carolina

Already Tried:
I have all information in my trading account I called the fund and they said i should have read the fine print. I never even saw a prospectus, and ameritrade will let u trade anything

Posted by DCrane 17 days and 6 hours ago.

Info Request

Thank you for the post Mr. Roberts, when you say "stole" do you mean that the stock declined in value without your knowledge?

17 days and 6 hours ago.

Reply

It wasnt supposed to declie, because i was short and the price fell from $147 to $42

Posted by DCrane 17 days and 6 hours ago.

Answer

To be clear, generally the notion of going short entails selling assets, usually securities, that have been borrowed from a third party, with the intention of buying identical assets back at a later date to return to the lender. The nature of a short sellet is to profit from a decline in the price of the assets between the sale and the repurchase, as he will pay less to buy the assets than he received on selling them. Conversely, the short seller will incur a loss if the price of the assets rises.

17 days and 6 hours ago.

Reply

that is not an answer to my question

Posted by DCrane 17 days and 6 hours ago.

Info Request

Mr. Roberts, it was not intended to be an answer to the entire question, but an answer in part to enable us to be clear on the nature of short selling. Was the above description consistent with your understanding of shorting stocks?

17 days and 6 hours ago.

Reply

I know what a short is, This was a short FUND. it traded just like stocks

Posted by DCrane 17 days and 6 hours ago.

Answer

I understand, the point in me asking you these questions is to be clear on your understanding. Unless you were mislead about the concepts involved, your loss on the fund would not give rise to a legal action. A judge would summarily dismiss your claim under the logic of the risks associated with investing and the notion that "it was not supposed to decline" would not be helpful unless you were offered a written assurance that the fund would not lose value.

17 days and 6 hours ago.

Reply

if the price goes up, and u have a long fund, it is supposed to mirror the action of the stock. and the fund price rises! OIL went down and i was short. the fund price should have gone up!! They liquidated the fund because they would have lost too much money

Posted by DCrane 17 days and 6 hours ago.

Answer

I see, so you are essentially asserting that the ran the fund into the ground on purpose. You could retain an attorney to file suit against the fund management, in addition you could report the matter to the SEC (http://www.sec.gov/complaint.shtml).

17 days and 6 hours ago.

Reply

yes!! and there were some that knew they were piquidating, but i didnt, !! That why i said they stole my money. They knew the price was going down, but allowed me to buy it

17 days and 5 hours ago.

Reply

do u think i have a case???

Posted by DCrane 17 days and 5 hours ago.

Answer

I think you have a case if they had a duty to disclose the status of the fund. If they had no fiduciary duty then you would not have a case because as an investor it would incumbent upon you to do your due diligence. In sum the answer is really whether you were acting as your own advisor or relying on another who knew it was a bad purchase but did not inform you.

17 days and 5 hours ago.

Reply

they said the did disclose....But neither ameritrade or myself got that memo

17 days and 5 hours ago.

Reply

sorry for my spelling. they said they did disclose, but u know the old saying.....if a tree falls in the forest ,did it really fall?

Posted by DCrane 17 days and 5 hours ago.

Answer

ok, yes you would have a case. If they cannot prove they met the burden of disclosure you can assert they did not.

17 days and 5 hours ago.

Reply

do u mean if they personally did not disclose to me? or my broker?? They said they just put out a release on it

Posted by DCrane 17 days and 5 hours ago.

Answer

no, I mean if they did not publicly disclose, they did not have a duty to contact you or your broker personally. Although your broker should have been on top of it via his/her research.

Edited by RHolloman on 11/5/2009 at 10:16 PM

17 days and 5 hours ago.

Reply

ohhhhh, I think im a loser, thanks anyway

Accepted Answer

I'm sorry, have a good day.

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Expert: DCrane
Pos. Feedback: 98.7 %
Accepts: 
Answered: 11/5/2009

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Negotiate, Draft, and Review many complex commercial agreements each year.

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