U.S. Oil Fund Receives SEC Notice Tied to Disclosures

U.S. Oil Fund LP, a major oil ETF, received an SEC Wells Notice, indicating the agency might bring an enforcement action.
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U.S. Oil Fund LP, one of the most popular oil exchange-traded funds, received a Wells Notice from the U.S. Securities and Exchange Commission. 

Such a notice indicates that the agency has completed an inquiry and intends to bring an enforcement action. It gives the recipient the opportunity to explain why the agency should not bring charges.

'The Wells Notice relates to USO’s disclosures in late April and early May regarding constraints imposed on USO’s ability to invest in oil futures contracts," the fund said in an SEC 8-K filing

USO in April filed an 8-K saying that it might not be able to meet its investment objective of reflecting spot oil prices, after U.S. crude oil futures contracts traded in negative territory for the first time

The Wells Notice was issued to U.S. Oil Fund of Walnut Creek, Calif.; its general partner, U.S. Commodity Funds LLC; and John Love, president and chief executive of the general partner. 

The notice alleges violations of certain sections of federal securities laws. 

The fund in an SEC filing maintains that "USO's disclosures and their actions were appropriate." The fund intends to "vigorously contest the allegations made" by the SEC and expects to discuss the matter with the agency's staff.