Investors in private funds formerly managed by defunct Chicago options trading firm LJM Partners, including funds known as LJM Investment Fund LP, LJM Preservation & Growth Fund, LP, LJM Aggressive Fund LP, LJM Fund LP, LJM Master Trading Fund, LP, PEC-LJM Fund LP, and PCF-LJM Preservation & Growth Fund, LP (“LJM Private Funds”) may have litigation or arbitration claims against stockbrokers or investment advisers who sold them or placed their funds in the LJM Private Funds.
The Commodity Futures Trading Commission and the Securities and Exchange Commission (“SEC”) recently filed litigation against LJM Partners Ltd. alleging the enterprise mismanaged $1 billion in assets by misleading investors about its short options trading strategy and risk management practices. According to the government lawsuit, LJM Partners unlawfully misled investors for two years about the risk management protocols and “worst case” losses investors could expect from the options trading strategy they employed in certain commodity pools and private investment funds (as well as in an open-end mutual fund also managed by LJM Partners, the LJM Preservation and Growth Fund (“LJM Fund”)).
In early February 2018, the LJM Fund dropped more than 80% over the course of just two days during a spike in the volatility index (VIX), losing more than $600 million for investors. While the losses in the LJM Private Funds varied, the LJM Private Funds also experienced substantial losses during this time frame as a result of utilizing the same general trading strategy.