The Financial Industry Regulatory Authority (FINRA) has censured and fined CAMBRIDGE INVESTMENT RESEARCH, over the supervisory failures in the sale of the LJM Preservation and Growth Fund in 2018.  According to FINRA, without admitting or denying the findings, Cambridge agreed to the censure, the $400,000 fine, and to pay $3.13 million, plus interest, in restitution.

The LJM Capital Preservation and Growth Fund sold three different share classes, and traded under the following symbols LJMIX, LJMAX, LCM.

LJMIX lost approximately 80% of its value in February of 2018. The LJM Preservation and Growth Fund launched in January of 2013. They took a drastic hit in the stock market, with investors losing over $600 million in two days. According to Fund information, it “seeks capital appreciation and capital preservation with low correlation to the broader U.S. equity market.” Actually, LJMIX was designed to pursue an uncovered short options-trading strategy. This fund should not be suggested to shareholders as a tool for capital preservation. Many see it as the complete opposite of capital preservation and growth. The fund was dissolved in March of 2018, with investors who had shares in February of 2018, taking an 80% loss in their investment.

FINRA alleged that Cambridge lacked a reasonably designed supervisory system to oversee the recommendation of alternative mutual funds. According to FINRA, Cambridge representatives sold $18 million in shares of LJM to over 550 customers between March of 2016 and February of 2018.

If you were not seeking speculation in leverage funds, your broker/dealer or financial advisor may be responsible for your LJMIX, LJMAX, or LCMCX losses for failure to recommend a suitable investment and failing to limit your losses. The LJM Capital preservation fund was not a fund designed to preserve capital but rather to make speculative bets.

LJMIX strategy was to bet that market volatility would not dramatically increase and that the market index level would not change.  When both the market volatility and the market index decline happened at the same time, as they did the first week of February of 2018, the results were devastating for investors who lost over 80% of the fund’s value.

Soreide Law Group may be able to recover these losses for investors in in the LJM Preservation and Growth Fund (LJMIX) through an arbitration with the Financial Industry Regulatory Authority (FINRA).

If your broker recommended investing in the LJM Preservation and Growth Fund (LJMIX) and you experienced financial losses, call Soreide Law Group and speak to an experienced securities lawyer at no cost to you at: 888-760-6552.

Soreide Law Group represents our clients nationwide before FINRA. We operate on a contingency fee basis—no fee if no recovery.