WASHINGTON, March 12, 2018 /PRNewswire/ -- Securities Litigation and Consulting Group, Inc. ("SLCG") has issued a report on the collapse of XIV on February 5, 2018. XIV lost 97% of its value or approximately $2 billion in a single day. Credit Suisse announced the following morning that it would redeem all outstanding XIV shares at the Closing Indicative Value on February 15, 2018.
SLCG's report finds that Credit Suisse represented that it would publish an estimate of the current economic value of XIV shares every 15 seconds based on real time VIX futures prices but, in fact, did not. According to SLCG, Credit Suisse effectively stopped updating its estimate of the current economic value of XIV shares at 4:10 pm when VIX futures prices were changing significantly.
One of the authors, Craig McCann, states investors paid $823.6 million to purchase 28.8 million shares after 4:15 pm at an average price of $28.60. Those aftermarket purchases at inflated prices transferred $700 million from unsophisticated, poorly-informed buyers to sophisticated, well-informed sellers.
McCann goes on to say that extraordinary trading in two critical futures contracts in the last minutes of trading before 4:15 pm on February 5, 2018 pushed up the futures' prices and triggered the XIV liquidation.
This study is available at http://www.slcg.com/pdf/workingpapers/Material%20Misrepresentations%20in%20XIV%20Prospectus%20Led%20to%20$700%20Million%20in%20Losses.pdf. Securities Litigation and Consulting Group, Inc. ("SLCG") is a financial economics consulting firm based in the Virginia suburbs outside of Washington, DC.
SLCG provides consulting services and expert witnesses to law firms, corporations, banks, brokerage firms and individuals throughout the United States. SLCG's staff includes PhD, MA and BA level professionals with academic, industry and government experience. Its experts have testified in state and federal court and in various arbitration forums. For further information about SLCG or its research, please contact Dr. Craig McCann at 703- 246-9381, craigmccann@slcg.com or visit us at http://www.slcg.com.
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SOURCE Securities Litigation and Consulting Group, Inc.
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