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The Wells notice states that SEC staff have
made a preliminary determination to recommend that the U.S.
securities regulator file an enforcement action against USO,
United States Commodity Fund LLC and its chief executive officer
John Love.
The notice relates to USO's disclosures in late April and early
May on the constraints imposed on USO's ability to invest in oil
futures contracts, the fund said in a regulatory filing.
(https://bit.ly/326Sb1r)
USO said in April that it may not be able to meet its investment
objective of reflecting the spot prices of oil any longer after
U.S. crude oil futures contracts traded in negative territory
for the first time in history.
On April 21, the fund stated that it had issued all of its
registered shares and was thus suspending the creation of new
shares. As a result of the suspension, there was a significant
discrepancy between the fund's trading price and the performance
of the oil futures it held.
USO said in the filing that the company, USCF and Love maintain
that USO's disclosures and their actions were appropriate.
They intend to contest the allegations made in the notice and
expect to engage in a dialogue with the SEC staff.
A Wells notice does not necessarily mean the SEC will bring any
action against the company or that the recipient has violated
any law.
(Reporting by Arathy S Nair in Bengaluru; Editing by Maju
Samuel)
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