ProShares hit by lawsuits over leveraged ETFS

Exchange-traded fund (ETF) provider ProShares is the target of two class action lawsuits filed by Labaton Sucharow in the US over the performance of its UltraShort Real Estate and Financials funds. The actions come in the wake of media scrutiny over divergent underlying and fund performance.

Each action accuses the defendants of violating the US Securities Act by "failing to disclose that [the fund] is altogether defective as a directional investment play, failing to perform anywhere near investor's reasonable expectations."

It highlights that while the Dow Jones US Financials index fell 51.03% between January 2, 2008 and December 17, 2008, the 200% inverse fund managed by ProShares rose 1.06%. The Real Estate fund fell 48.2% over the same period, states the complaint, while the Dow