Press Release

SEC Charges Exchange-Traded Product and Its General Partner With Disclosure Failures

For Immediate Release


Washington D.C., Nov. 8, 2021 —

The Securities and Exchange Commission today charged United States Oil Fund LP, an exchange-traded product (ETP), and its general partner United States Commodity Funds LLC for misleading statements about limitations imposed by its sole futures commission merchant and broker. USO and USCF have agreed to pay $2.5 million in penalties to settle parallel cases by the SEC and Commodity Futures Trading Commission

According to the SEC’s order, USO’s investment objective is to track the changes in the spot price of oil, as measured by the changes in prices of certain oil futures contracts. In April 2020, in the midst of oil market turmoil and the near-month futures contract closing at a negative price, USO’s sole futures broker told USO it would not execute any new oil futures positions for USO. As a result of this limitation, USO was restricted from investing the proceeds generated by the future sale of newly created shares in oil future contracts, creating the risk that USO would not be able to meet its stated investment objective. The order finds that USO did not fully disclose the character and nature of the limitation until one month after the limit was first imposed.

“ETP issuers must ensure that all of their disclosures are timely, complete and accurate and in compliance with the federal securities laws,” said Osman Nawaz, Acting Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit. “We will continue to pursue violations involving ETPs, including those ETPs using futures-linked and other complex strategies and structures.”

The SEC’s order finds that USO and USCF violated a negligence-based anti-fraud provision of the federal securities laws. Without admitting or denying the SEC’s findings, USO and USCF agreed to cease-and-desist orders and to pay a $2.5 million penalty, which will be offset by up to $1.25 million paid in CFTC’s parallel proceeding.  

The SEC’s investigation was conducted by Dee Raibourn and Joshua Brodsky with assistance from Daniel Nigro of the Complex Financial Instruments Unit. The investigation was further assisted by B. David Fraser and Matt Gulde of the Fort Worth Regional Office, and Mark Sylvester and Ling Yu of the New York Regional Office. The investigation was supervised by Mr. Nawaz and Eric Werner of the Fort Worth Regional Office. The SEC appreciates the assistance of the CFTC.


Last Reviewed or Updated: Nov. 8, 2021