Emerson v. Mutual Fund Series Trust

Updated: September 9, 2020
Status: Settled

If you purchased or otherwise acquired Class A, Class C, and/or Class I shares of the Catalyst Hedged Futures Strategy Fund (the “Fund”) during the period from November 1, 2014, through June 30, 2017, inclusive, you may be entitled to a payment from a class action settlement

 
On January 8, 2018, Labaton Sucharow was appointed co-lead counsel in a securities class action lawsuit against the defendants, Mutual Fund Series Trust (the “Trust”), Catalyst Capital Advisors, LLC (“Catalyst”), Northern Lights Distributors LLC (“NLD”), and certain of the Fund’s executives and/or trustees.  The action asserts claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, on behalf of all persons or entities that purchased or otherwise acquired shares of the Catalyst Futures Fund between November 1, 2014, and April 28, 2017, (the “Class Period”).  The plaintiffs filed an amended complaint on March 30, 2018.
 
Lead Plaintiffs allege that the Fund was marketed to investors as a capital preservation fund, with low volatility and low market correlation.  As such, Lead Plaintiffs allege that the Fund attracted conservative investors seeking a steady investment with low correlation to the stock market.  The Fund offered shares to investors pursuant to Registration Statements and Prospectuses.  These Offering Materials allegedly promoted the Fund as a low-risk and conservative investment vehicle, with allegedly inaccurate statements.  Lead Plaintiffs allege the Fund routinely made complex trades that amounted to massive shorts of the Standard & Poor’s 500 Index (“S&P 500”) that exposed the Fund to potentially unlimited losses of capital if the market were to rapidly move up.  Because the Fund faced the potential risk of unlimited loss of capital in a rapidly rising market, the Fund was not the conservative investment portrayed to investors.  Rather, Lead Plaintiffs allege it was highly speculative and not suitable for all investors, including investors seeking capital preservation, low volatility, and low exposure to the movement of the U.S. equity markets.  As a result, in February 2017, Lead Plaintiffs allege the Fund had a “melt down” when the S&P 500 experienced a steady and rapid increase in value.  Between February 2 and February 15, 2017, the net asset value (“NAV”) for the Fund’s shares fell approximately 15%.
 
On June 5, 2018, Defendants filed a Joint Motion to Dismiss the Complaint.  On June 25, 2019, the Court granted Defendants’ motion to dismiss the Complaint in its entirety and dismissed Lead Plaintiffs’ claims with prejudice. On July 18, 2019, Lead Plaintiffs moved, pursuant to Rule 59(e), to alter or amend the Dismissal Judgment, entered on June 26, 2019, and for leave, pursuant to Rule 15(a)(2), to file a proposed second amended complaint.  Defendants filed a joint memorandum of law in opposition to Lead Plaintiffs’ motion and Lead Plaintiffs filed a reply brief in support of their motion on August 22, 2019.
 
In September 2019, Lead Plaintiffs and Defendants, through their counsel, conferred on the possibility of reaching a negotiated resolution of the Action. Following continued, extensive arm’s-length negotiations, on November 26, 2019, pursuant to the Mediator’s recommendation, the Parties agreed, in principle, to settle all claims in the Action for $3,325,000, subject to the execution of a customary stipulation and agreement of settlement and related papers. 
 
Submit Claim Form
If you purchased or otherwise acquired Class A, Class C, and/or Class I shares of the Catalyst Hedged Futures Strategy Fund (the “Fund”) during the period from November 1, 2014, through June 30, 2017, inclusive, you may be entitled to a payment from a class action settlement.  To be eligible for a payment, you must submit a Claim Form to the Claims Administrator by August 17, 2020.
 
Settlement Hearing
 
The Court held the Settlement Hearing on September 9, 2020 and approved the Settlement, the Plan of Allocation, and the request for attorneys’ fees and expenses.
 
If you have questions about the Settlement, please contact Labaton Sucharow at settlementquestions@labaton.com or 1-888-219-6877, or contact the Claims Administrator, A.B. Data at 1-877-236-1413.  Additional information about the Settlement can also be found at: www.CatalystSecuritiesSettlement.com.