Popular oil ETF USO receives letter of possible enforcement action from the SEC after fund’s collapse in April

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U.S. Oil Fund LP , one of the most popular ways for retail investors to gain exposure to crude-oil futures , could face a civil-enforcement action related to the exchange-traded fund’s handling of the precipitous fall in crude-oil contracts in April. The sponsor for the ETF, United States Commodity Fund LLC, said about six months ago that it would suspend the creation of shares of the ETF and later embarked upon a number of restructurings of the investment vehicle that it said would likely make the fund no longer reflective of trading of spot and oil contracts. The so-called Wells notice has also been issued to USCF CEO John Love, according to reports. A Wells notice is a letter saying the Securities and Exchange Commission plans to bring an enforcement action against a company or individual and gives the recipients a chance to argue why the action shouldn’t be taken. USO and its parent at the time of its collapse held an alarmingly large position in June West Texas Intermediate futures contracts when the May contract turned negative for the first time in history due to a severe shortage of storage tanks in Oklahoma. The ETF had been used as a popular, but potentially dangerous, way for individual investors to speculate on the crude-oil market.
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