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Investor files lawsuit over U.S. LJM fund that lost most of its value

From Reuters - February 9, 2018

NEW YORK (Reuters) - An investor on Friday filed a lawsuit against managers of a U.S. mutual fund that relied heavily on a strategy that profits from calm markets but lost four-fifths of its value in turmoil this week.

In a complaint seeking class-action status filed in U.S. District Court in Chicago, investor Leonard Sokolow said he owned shares of LJM Preservation and Growth Fund, a once-$800 million fund that lost most of its value despite touting its ability to deliver solid returns while maintaining risk parameters in its most recent annual report to shareholders.

In truth, however, [the fund] was not focused on capital preservation and left investors exposed to an unacceptably high risk of catastrophic losses, the complaint said.

A spokesman for Chicago-based LJM Partners Inc, parent of the funds operating unit, could not be reached.

The LJM fund appeared to be the latest casualty in a series of spectacular blow-ups of investment strategies that effectively bet on low or falling volatility.

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