An investor in ProShares UltraShrt Mrkt (ETF) (Public, NYSE:EEV) filed a lawsuit in United States District Court for the District of Maryland, on behalf of all persons who purchased or otherwise acquired shares in the UltraShort MSCI Emerging Markets ProShares fund (NYSE: EEV), an exchange-traded fund ( ETF ) offered by ProShares Trust, pursuant or traceable to ProShares' Registration Statement, Prospectuses, and Statements of Additional Information issued in connection with the EEV Fund's shares against ProShares Trust, ProShare Advisors LLC, SEI Investments Distribution Co, and others over alleged violations of Federal Securities Laws.
According to the complaint the plaintiff alleges that ProShares Trust, ProShare Advisors LLC, and other defendants violated Sections 11 and 15 of the Securities Act of 1933. The UltraShort MSCI Emerging Markets ProShares fund is one of ProShares' UltraShort ETFs. ProShares Trust sells its Ultra and UltraShort ETFs as simple directional plays. As marketed by ProShares, Ultra ETFs are designed to go up when markets go up; UltraShort ETFs are designed to go up when markets go down.

ProShares UltraShort MSCI Emerging Markets seeks daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the MSCI Emerging Markets Index, which adjusts the market capitalization of index constituents for free float and targets for index inclusion 85% of free float-adjusted market capitalization in each industry group in global emerging markets countries. Accordingly, the UltraShort MSCI Emerging Markets ProShares Fund is supposed to deliver double the inverse return of the Emerging Markets Index, which fell approximately 52 percent from January 2, 2008 through December 17, 2008, so the lawsuit. The plaintiff alleges that while the UltraShort MSCI Emerging Markets ProShares Fund should have appreciated by 104 percent from January 2, 2008 through December 17, 2008, the EEV Fund in reality fell approximately 30 percent (a 134 percent shortfall) during this period. The plaintiff alleges that the defendants violated the Securities Act by failing to disclose that the UltraShort MSCI Emerging Markets ProShares Fund is altogether defective as a securities product and as directional investment play.