Investor Alert: Motley Rice reviews possible shareholder losses of United States Oil Fund, LP

USO ETF investors who suffered significant losses in connection with the ETF that invested in crude oil futures contracts may apply for appointment as Lead Plaintiff on August 18, 2020

Motley Rice LLC, one of the nation’s largest plaintiffs’ law firms, is reviewing claims of potential losses sustained by shareholders in connection with United States Oil Fund, LP (NYSE: USO), an exchange-traded fund (ETF) that invests in West Texas Intermediate (WTI) crude oil futures contracts, and which recently suffered significant market losses. Investors who purchased stock in the USO ETF between March 19, 2020 and April 28, 2020, and have suffered losses may have a claim and may be eligible to apply for appointment as Lead Plaintiff in a federal securities class action that has been filed against USO. 

If you purchased USO’s ETF securities between March 19, 2020 and April 28, 2020, you may have a claim. If you would like to discuss your potential legal options rights, you can contact Motley Rice securities fraud lawyer William S. Norton by calling him at 1-800-768-4026 toll free, or by completing this form.

A lawsuit has been filed in the U.S. District Court for the Southern District of New York on behalf of all those who purchased USO securities between March 19, 2020 and April 28, 2020 (the Class Period). The case, Lucas v. United States Oil Fund, LP et al., No. 1:20-cv-04740 (S.D.N.Y.) was filed on June 19, 2020, and is assigned to U.S. District Court Judge Paul G. Gardephe.

The complaint alleges that during the Class Period, the defendants stated USO would achieve its investment objective by investing substantially all of its portfolio assets in the near month WTI futures contract for light, sweet crude oil delivered to Cushing, Oklahoma, and traded on the New York Mercantile Exchange. When USO made its offer, however, it faced extraordinary market conditions. 

As governments and businesses responded to the coronavirus pandemic by imposing lockdowns and halting operations, oil demand fell precipitously. In addition, shortly before USO registered with the SEC to sell new shares, Saudi Arabia and Russia launched an oil price war, increasing production and slashing export prices. As excess oil supply increased and oil prices waned, the facilities available for storage in Cushing, Oklahoma, approached capacity, ultimately causing a rare market dynamic known as “super contango” in which the futures prices for oil substantially exceeded the spot price. Nevertheless, on March 19, 2020, USO filed with the SEC a registration statement that allowed USO to sell $2.4 billion worth of new shares in March alone.

Because of the nature of USO’s investment strategy, these converging factors allegedly caused the Fund to suffer substantial losses and undermined the Fund’s ability to meet its ostensible investment objective.

Ultimately, USO suffered billions of dollars in losses and abandoned its investment strategy. Through a series of rapid-fire investment overhauls, USO transformed from the passive ETF designed to track spot oil prices, which defendants had pitched to investors, into an actively managed fund. In April and May 2020, USO acknowledged the extreme threats and adverse impacts it had been experiencing at the time of its March 2020 securities offering, and which investors allege USO failed to disclose to them then. On May 29, 2020, Bloomberg reported that the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission had both opened investigations into whether USO had properly disclosed the risks involved with the ETF.