Frequently Asked Questions
- Why did I get the Notice?
- What is this proceeding about?
- Who is potentially eligible to participate in the Fair Fund?
- Who is excluded from participation in the Fair Fund?
- Who is the Fund Administrator?
- What is the Relevant Period?
- What is the total amount of the Fair Fund?
- What do I need to do to participate in the Fair Fund?
- What do I need to submit with my Claim Form?
- What is considered acceptable/sufficient documentation to support my transactions on my Claim Form?
- Who should I contact to get the required supporting documentation to send in with my claim?
- The Claim Form requests an account number, where can I obtain this information?
- What is the deadline for submitting my Claim Form?
- Will I be notified if my Claim Form is deficient?
- How much money will I receive if my claim is approved?
- How will my information be protected?
- How do I get information about my claim?
- What is the relevant CUSIP and ticker for the security during the Relevant Period?
Why did I get the Notice?
The purpose of the Plan Notice is to inform you that you may be eligible to share in the proceeds of the S&P Dow Jones Indices Fair Fund. To be potentially eligible to share in the S&P Dow Jones Indices Fair Fund, you must file a Claim Form in accordance with the steps set forth in the Plan Notice and in the Plan of Distribution (the “Plan”) approved by the Securities and Exchange Commission (“SEC” or “Commission”).
A copy of the Notice can be found here.Back To Top
What is this proceeding about?
On May 17, 2021, the Commission issued an Order Instituting Cease-and-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and Imposing a Cease-and-Desist Order (the “Order”) against the Respondent, S&P Dow Jones Indices LLC. According to the Order, on Monday, February 5, 2018, despite notable market volatility, an index published by Respondent remained static during certain intervals between the 4:00 PM hour up until 5:08 PM, even though it was supposed to calculate values based on real-time prices of certain VIX futures contracts. This was due to the implementation of a heretofore unknown quality control feature called an “Auto Hold” used by Respondent.
An Auto Hold comes into effect if an index value breaches certain thresholds, at which point the immediately prior index value continues to be reported. The repetition of this index value continues until a current index value comes back within those thresholds or responsible Respondent’s personnel manually release the Auto Hold. On February 5, 2018, during the intervals described above, Respondent’s personnel did not release the Auto Hold for the index, resulting in the publication and dissemination of static index values, rather than values based on the real-time prices of certain VIX futures contracts.
The index was the primary input for the calculation of the Security’s indicative value, so like the index’s values, the Security’s indicative values published to the market during the same intervals on February 5, 2018 were similarly static. As a result, during certain intervals between the 4:00 PM hour up until 5:08 PM, the Security’s indicative values being reported in real-time were higher than what would have been calculated and disseminated if the Auto Hold had not been triggered. As such, during the 4:00 PM hour and until 5:09 PM, when the closing indicative value of XIV was published, investors did not know that they had been purchasing and/or holding a product that had an economic value that was substantially less than what had been publicly reported. In addition, unlike the XIV indicative values being published to the market, the XIV indicative values that would have been published if the Auto Hold had not been triggered would have breached a key metric that would have provided the issuer a right to accelerate, or call, all outstanding XIV notes.
Without admitting or denying the allegations, Respondent consented to the entry of an order alleging violations of Section 17(a)(3) of the Securities Act of 1933. The Commission ordered the Respondent to pay a $9,000,000 civil money penalty to the Commission. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalty paid can be distributed to harmed investors. The Fair Fund consists of the $9,000,000 paid by the Respondent.
The Respondent has paid in full. The Fair Fund has been deposited at the United States Department of the Treasury’s Bureau of the Fiscal Service (“BFS”) for investment, and any interest accrued will be added to the Fair Fund.Back To Top
Who is potentially eligible to participate in the Fair Fund?
To qualify for a payment from the S&P Dow Jones Indices Fair Fund, you must satisfy certain eligibility criteria that are described in detail in the Plan. The Plan can be found under the Important Documents page or on the Commission’s public website at www.sec.gov/divisions/enforce/claims/sp-dow-jones-indices.htm. You can also request a copy of the Plan by calling the Fund Administrator at 855-604-1705 or by emailing info@SPDowJonesIndicesFairFund.com. The eligibility criteria include the following:
- You must have purchased and/or held VelocityShares Daily Inverse VIX Short Term ETNs linked to the S&P 500 VIX Short-Term Futures Index due December 4, 2030, listed on a U.S. exchange and registered with the Commission and traded under the symbol XIV during the Relevant Period.
- Your approved transactions must calculate to a Recognized Loss as calculated under the Plan and your Distribution Payment must equal or exceed $10.00.
PLEASE NOTE: RECEIPT OF THE NOTICE DOES NOT MEAN THAT YOU ARE AN ELIGIBLE CLAIMANT AS THAT TERM IS DEFINED IN THE PLAN.Back To Top
Who is excluded from participation in the Fair Fund?
You are excluded from participation in the S&P Dow Jones Indices Fair Fund if you are an Excluded Party as defined in the Plan, including:
- The Respondent (“S&P Dow Jones Indices LLC”);
- Present or former officers or directors of Respondent or any assigns, creditors, heirs, distributees, spouses, parents, dependent children or controlled entities of any of the foregoing Persons or entities;
- Any employee or former employee of the Respondent or any of its affiliates who has been terminated for cause or has otherwise resigned, in connection with the conduct described in the Order;
- Any Person who, as of the Claims Bar Date, has been the subject of criminal charges related to the conduct described in the Order or any related Commission action;
- Any firm, trust, corporation, officer, or other entity in which Respondent has or had a controlling interest;
- The Fund Administrator, its employees, and those Persons assisting the Fund Administrator in its role as the Fund Administrator; or
- Any purchaser or assignee of another Person’s right to obtain a recovery from the Fair Fund for value; provided, however, that this provision shall not be construed to exclude those Persons who obtained such a right by gift, inheritance or devise.
Who is the Fund Administrator?
On November 2, 2021, the Commission appointed Epiq Class Action & Claims Solutions, Inc. (“Epiq”) as the Fund Administrator.Back To Top
What is the Relevant Period?
“Relevant Period” means the period of time between 4:09:40 p.m. on February 5, 2018 and 5:09 p.m. EST on the same date.Back To Top
What is the total amount of the Fair Fund?
The Commission ordered the Respondent to pay a $9,000,000 civil money penalty to the Commission. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalty paid can be distributed to harmed investors.Back To Top
What do I need to do to participate in the Fair Fund?
To participate in the Fair Fund, you must timely submit a completed and signed Claim Form with supporting documents to:
S&P Dow Jones Indices Fair Fund
P.O. Box 5429
Portland, OR 97228-5429
A Claim Form was included with the Plan Notice and is available for download here. If you do not complete and timely submit a Claim Form, you will not be considered for eligibility to receive a Distribution Payment under the Plan.
The completed and signed Claim Form, with supporting documentation, must be postmarked, or if not sent by U.S. Mail, received at the above address by November 9, 2022. Claims postmarked or, if not sent by U.S. mail, received after November 9, 2022 will not be eligible to participate in the distribution of the S&P Dow Jones Indices Fair Fund.
Please note that filing a Claim Form does not assure that you will share in the proceeds of the Fair Fund created in this matter. A Potential Claimant’s eligibility for a Distribution Payment under the Plan will be determined by the Fund Administrator in accordance with the Plan.Back To Top
What do I need to submit with my Claim Form?
You must document each transaction that you include on your Claim Form. Acceptable forms of supporting documentation include, but are not limited to:
- Trade confirmation slips from brokerage firms that list the security name, the name of the beneficial owner, the type of transaction, the date of the transaction, the number of shares, and the total amount of the transaction; or
- Monthly statements from brokerage firms that detail all activity within a month.
What is considered acceptable/sufficient documentation to support my transactions on my Claim Form?
Acceptable documentation must include the name of the owner or owners of the account for which you are filing a claim, the name of the broker through whom the security was traded, trade date, number of shares purchased, acquired and/or sold, and price paid (excluding brokers’ commissions, taxes and fees).
Acceptable documentation includes contract notes, brokers’ confirmation slips, account activity pages from brokers’ computer printouts (including the front page), or account activity pages from brokers’ monthly statements (including the front page), if those statements contain the required information. Letters from your broker are acceptable only if they are on the brokers’ letterhead and contain the required information listed above. Your own records or certificates DO NOT constitute acceptable documentation. We cannot pre-approve any documentation as acceptable without seeing it first.Back To Top
Who should I contact to get the required supporting documentation to send in with my claim?
Depending on how you acquired your investment in XIV, you can generally obtain the necessary documentation to submit with a Claim Form from:
- your broker;
- your tax advisor; and/or
- the person/party from whom you purchased, or through whom you sold, the security.
Acceptable supporting documentation must be included with your completed Claim Form, or your claim may be rejected.Back To Top
The Claim Form requests an account number, where can I obtain this information?
Most brokerage firms and financial institutions assign account numbers to your account for easier reference. This number is typically included on the statements you receive. Please include your account number on Part II of the Claim Form.Back To Top
What is the deadline for submitting my Claim Form?
The deadline to submit a completed and signed Claim Form with the necessary documentation is November 9, 2022. The Claim Form must be postmarked, or, if not sent by U.S. mail, received by the Fund Administrator (Epiq) by this date.Back To Top
Will I be notified if my Claim Form is deficient?
Yes. If your Claim Form is deficient, you will receive a Deficiency Notice setting forth the reason why the claim is deficient and advising you of the opportunity to cure such deficiency.Back To Top
How much money will I receive if my claim is approved?
Until all claims have been fully processed, it is not possible to determine the amount of any individual payment because the amount will depend on a variety of factors, including the number of valid claims processed and the details of your specific investment(s). In order for a claim to be paid, the Distribution Payment must equal or exceed $10.00.Back To Top
How will my information be protected?
As a long-established firm, Epiq's electronic systems, software applications, and employee and operational protocols are all designed to protect and secure the case information provided to us. Further, Epiq is obligated to fulfill the security requirements mandated by the various court jurisdictions and governmental entities that oversee the various types of cases it administers.Back To Top
How do I get information about my claim?
You may contact the Fund Administrator by calling toll-free 855-604-1705, sending an email to info@SPDowJonesIndicesFairFund.com, or by writing to P.O. Box 5429, Portland, OR 97228-5429 for more information.Back To Top
What is the relevant CUSIP and ticker for the security during the Relevant Period?
VelocityShares Daily Inverse VIX Short Term Exchange Traded Notes linked to the S&P 500 VIX Short-Term Futures Index due December 4, 2030 traded under the symbol XIV during the Relevant Period. The Ticker is XIV, the Cusip is 22542D795 and the ISIN is US22542D7957.Back To Top