Law Offices of Howard G. Smith Announces Class Action Lawsuit Against Proshares’ UltraShort Financials ProShares Fund

Law Offices of Howard G. Smith announces that a class action lawsuit has been filed in the United States District Court for the Southern District of New York, on behalf of all persons who purchased or otherwise acquired shares in the UltraShort Financials ProShares fund (the "SKF Fund") (NYSE:SKF), an exchange-traded fund (“ETF”) offered by ProShares Trust (“ProShares”), pursuant or traceable to ProShares’ false and misleading Registration Statement, Prospectuses, and Statements of Additional Information (collectively, the “Registration Statement”) issued in connection with the SKF Fund’s shares (the “Class”). The Class is seeking to pursue remedies under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”).

The complaint names ProShares, ProShare Advisors LLC, SEI Investments Distribution Co., Michael L. Sapir, Louis M. Mayberg, Russell S. Reynolds, III, Michael Wachs, and Simon D. Collier as defendants (collectively, “Defendants”). ProShares 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. The SKF Fund is one of ProShares’ UltraShort ETFs. The SKF Fund seeks investment results that correspond to twice the inverse (–200%) daily performance of the Dow Jones U.S. Financials Index ("DJFIX”), which measures the performance of the financial services industry of the U.S. equity market. Accordingly, the SKF Fund is supposed to deliver double the inverse return of the DJFIX, which fell approximately 51.03 percent from January 2, 2008 through December 17, 2008, ostensibly creating a sizeable profit for investors who anticipated a decline in the U.S. financial services industry. In other words, the SKF Fund should have appreciated by 102.6 percent during this period. However, the SKF Fund actually fell approximately 1.06 percent during this period — the antithesis of a directional play.

The complaint alleges the Defendants violated the Securities Act by failing to disclose that the SKF Fund is altogether defective as a directional investment play, failing to perform anywhere near investors' reasonable expectations. Specifically, Defendants failed to disclose the following risks in the Registration Statement: (1) inverse correlation between the SKF Fund and the DJFIX over time would only happen in the rarest of circumstances, and inadvertently if at all; (2) the extent to which performance of the SKF Fund would inevitably diverge from the performance of the DJFIX -- i.e., the probability, if not certainty, of spectacular tracking error; (3) the severe consequences of high market volatility on the SKF Fund's investment objective and performance; (4) the severe consequences of inherent path dependency in periods of high market volatility on the SKF Fund's performance; (5) the role the SKF Fund plays in increasing market volatility, particularly in the last hour of trading; (6) the consequences of the SKF Fund's daily hedge adjustment always going in the same direction as the movement of the underlying index, notwithstanding that it is an inverse leveraged ETF; (7) the SKF Fund causes dislocations in the stock market; (8) the SKF Fund offers a seemingly straightforward way to obtain desired exposure, but such exposure is not attainable through the SKF Fund.

No class has yet been certified in the above action. Until a class is certified, you are not represented by counsel unless you retain one. If you purchased shares in the SKF Fund pursuant to the Registration Statement, you have certain rights, and have until October 20, 2009, to move for Lead Plaintiff status. To be a member of the class you need not take any action at this time, and you may retain counsel of your choice. If you wish to discuss this action or have any questions concerning this Notice or your rights or interests with respect to these matters, please contact Howard G. Smith, Esquire, of Law Offices of Howard G. Smith, 3070 Bristol Pike, Suite 112, Bensalem, Pennsylvania 19020, by telephone at (215)638-4847, Toll-Free at (888)638-4847, by email to howardsmith@howardsmithlaw.com or visit our website at www.howardsmithlaw.com.