Ropes & Gray Litigation Team Wins Dismissal of Securities Class Action for Leading Oil ETF

A team of Ropes & Gray litigators has won dismissal of a consolidated securities class action asserted against U.S. Oil Fund (USO), a leading exchange-traded fund (ETF) that tracks the performance of short-term futures contracts on crude oil.  The consolidated cases arose out of extreme oil market price volatility at the outset of the COVID pandemic in February and March 2020, which coincided with an oil price war between Russia and Saudi Arabia. 

The plaintiffs alleged that the fund’s registration statements in early 2020 featured misleading statements and omissions regarding the fund’s features and risks, including the impact of oil market dislocations, potential impacts of the fund’s own trading on market prices, and the effects from changes to regulatory limits on the fund’s futures holdings. 

Judge Paul Gardephe of the U.S. District Court for the Southern District of New York issued a lengthy ruling on September 29, rejecting each of the complaint’s theories, finding repeatedly that USO’s extensive disclosures – including real-time updates during the 2020 market meltdown – made clear to investors the relevant fund features and risks of investing.  Plaintiffs therefore failed as a matter of law to allege any misleading statements or omissions in the fund’ disclosures, which (along with other legal flaws) compelled dismissal of claims.

The Ropes & Gray team was led by securities litigation partners Amy Roy and Robert Skinner and includes associates Jessica Bergin, Reeva Dua, Liz McInerney, and Desiree Pelletier.