The United States Oil Fund LP, the country’s largest crude exchange-traded fund, said on Wednesday it received a Wells notice from the U.S. Securities and Exchange Commission.

United States Oil Fund gets Wells notice from SEC- oil and gas 360

Source: Reuters

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. (

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.

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