Tip, The portfolios are set up, administered and marketed by a group who promised cash for creation units. They are paid a fee for their services, including cashing in of creation units. If the portfolio is not allowed to turn stocks into cash, the person cashing in a creation unit may have a lawsuit against the sponsor of the portfolio, not against the portfolio itself. At least that is the way I read and I'm sure several ambulance chasers would read it differently.
However, I don't think even the sponsor could lose a lawsuit when a sovereign country has barred them from raising cash. Depends upon how the prospectus is worded, especially the Statement of Additional Information.
It is cut and dried in mutual funds, probably less so in Webs. For example, if Fidelity tells you that you can write checks on a fund, and your checks bounce, then you can sue Fidelity. You cannot sue the fund. The fund is owned by the shareholders and managed by Fidelity. In fact, there have been many cases of shareholders canning the fund management co. and hiring somebody else. The MPT funds are the most recent that I remember. You have no claim on the fund assets other than your own shares. Fidelity is owned by a bunch of goofs in Boston. Rich goofs. <G> If they rip you off, you can sue them, but not the fund.
At American Capital, the mgt. co. got sued often, but never lost a lawsuit. Didn't mean diddly to the funds, though it did go into the prospectus.
MB |
