Class Action Suit Against ProShares Dismissed

NEW YORK (TheStreet) -- Reuters reporter Jessica Toonkel reported Monday that Judge John G. Koeltl, of the United States District Court for the Southern District of New York, dismissed a class-action lawsuit against ProShares filed by investors in exchanged-traded funds who claimed the risks associated with investing in leveraged ETFs were not fully disclosed.

At the time of the filing in August 2009, I outlined the details of the class-action lawsuit against ProShares's Ultra Short Real Estate (SRS) ETF, provided my point-by-point rebuttal of every claim and concluded the suit was without merit.

Judge Koeltl apparently agreed.

The company was pleased by the ruling.

"We have maintained since the beginning of this case that the allegations were wholly without merit, and we are pleased that the claims have been dismissed in their entirety," said Amy Doberman, ProShares' general counsel, in a statement.

"ProShares has demonstrated a long-standing commitment to educating investors about our products and their risks and benefits, so it is gratifying that Judge Koeltl's ruling rests on the strength and quality of our disclosures."

In the court's dismissal Monday Judge Koeltl wrote that ProShares was explicit in disclosing the risks involved with investing in its products.

"That the plaintiffs held the ETF shares over long periods of time, despite the language in the registration statement, is not enough to support a cause of action," the judge wrotel. Assertions made by the plaintiffs were said to be "implausible."

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Ron Rowland is the founder and president of Capital Cities Asset Management, a fee-based registered investment adviser in Austin, Texas. He is also the founder and publisher of Invest With An Edge and All Star Investor, where he has been providing market commentary and active investment advice since 1991. Opinions expressed in this article should not be considered personal recommendations to buy or sell any security.