Item 3. Legal Proceedings
Item
3. Legal Proceedings.
From time to time, UNL may be involved
in legal proceedings arising primarily from the ordinary course of its business. UNL is not currently party to any material legal
proceedings. In addition, USCF, as the general partner of UNL and the Related Public Funds may, from time to time, be involved
in litigation arising out of its operations in the ordinary course of business. Except as described herein, USCF is not currently
party to any material legal proceedings.
SEC and CFTC Wells Notices
On August 17, 2020, USCF, USO, and John
Love received a “Wells Notice” from the staff of the SEC (the “SEC Wells Notice”). The SEC Wells Notice
relates to USO's disclosures in late April and early May regarding constraints imposed on USO's ability to invest in Oil Futures
Contracts. The SEC Wells Notice states that the SEC staff has made a preliminary determination to recommend that the SEC file an
enforcement action against USCF, USO, and Mr. Love alleging violations of Sections 17(a)(1) and 17(a)(3) of the 1933 Act and Section
10(b) of the Exchange Act and Rule 10b-5 thereunder, in each case with respect to its disclosures and USO’s actions.
On August 19, 2020, USCF, USO, and Mr.
Love received a Wells Notice from the staff of the CFTC (the “CFTC Wells Notice”). The CFTC Wells Notice states that
the CFTC staff has made a preliminary determination to recommend that the CFTC file an enforcement action against USCF, USO, and
Mr. Love alleging violations of Sections 4o(1)(A) and (B) and 6(c)(1) of the CEA, 7 U.S.C. §§ 6o(1)(A), (B), 9(1) (2018),
and CFTC Regulations 4.26, 4.41, and 180.1(a), 17 C.F.R. §§ 4.26, 4.41, 180.1(a) (2019), in each case with respect to
its disclosures and USO’s actions.
A Wells Notice is neither a formal charge
of wrongdoing nor a final determination that the recipient has violated any law. USCF, USO, and Mr. Love maintain that USO’s
disclosures and their actions were appropriate. They intend to vigorously contest the allegations made by the SEC staff in the
SEC Wells Notice and the CFTC staff in the CFTC Wells Notice.
In re: United States Oil Fund, LP Securities
Litigation
On June 19, 2020, USCF, USO, John P. Love,
and Stuart P. Crumbaugh were named as defendants in a putative class action filed by purported shareholder Robert Lucas (the “Lucas
Class Action”). The Court thereafter consolidated the Lucas Class Action with two related putative class actions filed on
July 31, 2020 and August 13, 2020, and appointed a lead plaintiff. The consolidated class action is pending in the U.S. District
Court for the Southern District of New York under the caption In re: United States Oil Fund, LP Securities Litigation, Civil
Action No. 1:20-cv-04740.
On November 30, 2020, the lead plaintiff
filed an amended complaint (the “Amended Lucas Class Complaint”). The Amended Lucas Class Complaint asserts claims
under the 1933 Act, the Exchange Act, and Rule 10b-5. The Amended Lucas Class Complaint challenges statements in registration statements
that became effective on February 25, 2020 and March 23, 2020 as well as subsequent public statements through April 2020 concerning
certain extraordinary market conditions and the attendant risks that caused the demand for oil to fall precipitously, including
the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The Amended Lucas Class Complaint purports to have been
brought by an investor in USO on behalf of a class of similarly-situated shareholders who purchased USO securities between February
25, 2020 and April 28, 2020 and pursuant to the challenged registration statements. The Amended Lucas Class Complaint seeks to
certify a class and to award the class compensatory damages at an amount to be determined at trial as well as costs and attorney’s
fees. The Amended Lucas Class Complaint named as defendants USCF, USO, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew
F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes III, as well as the marketing agent, ALPS Distributors,
Inc., and the Authorized Participants: ABN Amro, BNP Paribas Securities Corporation, Citadel Securities LLC, Citigroup Global Markets,
Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Goldman Sachs & Company, J.P. Morgan Securities Inc.,
Merrill Lynch Professional Clearing Corporation, Morgan Stanley & Company Inc., Nomura Securities International Inc., RBC Capital
Markets LLC, SG Americas Securities LLC, UBS Securities LLC, and Virtu Financial BD LLC.
The lead plaintiff has filed a notice of
voluntary dismissal of its claims against BNP Paribas Securities Corporation, Citadel Securities LLC, Citigroup Global Markets
Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Morgan Stanley & Company, Inc., Nomura Securities International,
Inc., RBC Capital Markets, LLC, SG Americas Securities LLC, and UBS Securities LLC.
USCF, USO, and the individual defendants
in In re: United States Oil Fund, LP Securities Litigation intend to vigorously contest such claims and move for their dismissal.
Wang Class Action
On July 10, 2020, purported shareholder
Momo Wang filed a putative class action complaint, individually and on behalf of others similarly situated, against defendants
USO, USCF, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L.
Ellis, Malcolm R. Fobes, III, ABN Amro, BNP Paribas Securities Corp., Citadel Securities LLC, Citigroup Global Markets Inc., Credit
Suisse Securities USA LLC, Deutsche Bank Securities Inc., Goldman Sachs & Company, JP Morgan Securities Inc., Merrill Lynch
Professional Clearing Corp., Morgan Stanley & Company Inc., Nomura Securities International Inc., RBC Capital Markets LLC,
SG Americas Securities LLC, UBS Securities LLC, and Virtu Financial BD LLC, in the U.S. District Court for the Northern District
of California as Civil Action No. 3:20-cv-4596 (the “Wang Class Action”).
The Wang Class Action asserted federal
securities claims under the 1933 Act, challenging disclosures in a March 19, 2020 registration statement. It alleged that the defendants
failed to disclose to investors in USO certain extraordinary market conditions and the attendant risks that caused the demand for
oil to fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The Wang Class Action
was voluntarily dismissed on August 4, 2020.
Mehan Action
On August 10, 2020, purported shareholder
Darshan Mehan filed a derivative action on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh,
Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes, III (the “Mehan
Action”). The action is pending in the Superior Court of the State of California for the County of Alameda as Case No. RG20070732.
The Mehan Action alleges that the defendants
breached their fiduciary duties to USO and failed to act in good faith in connection with a March 19, 2020 registration statement
and offering and disclosures regarding certain extraordinary market conditions that caused demand for oil to fall precipitously,
including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The complaint seeks, on behalf of USO, compensatory
damages, restitution, equitable relief, attorney’s fees, and costs. All proceedings in the Mehan Action are stayed pending
disposition of the motion(s) to dismiss in In re: United States Oil Fund, LP Securities Litigation.
USCF, USO, and the other defendants intend
to vigorously contest such claims.
In re United States Oil Fund, LP Derivative
Litigation
On August 27, 2020, purported shareholders
Michael Cantrell and AML Pharm. Inc. DBA Golden International filed two separate derivative actions on behalf of nominal defendant
USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Andrew F Ngim, Gordon L. Ellis, Malcolm R. Fobes, III, Nicholas
D. Gerber, Robert L. Nguyen, and Peter M. Robinson in the U.S. District Court for the Southern District of New York at Civil Action
No. 1:20-cv-06974 (the “Cantrell Action”) and Civil Action No. 1:20-cv-06981 (the “AML Action”), respectively.
The complaints in the Cantrell and AML
Actions are nearly identical. They each allege violations of Sections 10(b), 20(a) and 21D of the Exchange Act, Rule 10b-5 thereunder,
and common law claims of breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate
assets. These allegations stem from USO’s disclosures and defendants’ alleged actions in light of the extraordinary
market conditions in 2020 that caused demand for oil to fall precipitously, including the COVID-19 global pandemic and the Saudi
Arabia-Russia oil price war. The complaints seek, on behalf of USO, compensatory damages, restitution, equitable relief, attorney’s
fees, and costs. The plaintiffs in the Cantrell and AML Actions have marked their actions as related to the Lucas Class Action.
On September 9, 2020, the Court entered
an order consolidating the Cantrell and AML Actions under the caption In re United States Oil Fund, LP Derivative Litigation ,
Civil Action No. 1:20-cv-06974 and appointing co-lead counsel. All proceedings in In re United States Oil Fund, LP Derivative Litigation
are stayed pending disposition of the motion(s) to dismiss in In re: United States Oil Fund, LP Securities Litigation.
USCF, USO, and the other defendants intend
to vigorously contest the claims in In re United States Oil Fund, LP Derivative Litigation.
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Item 4. Mine Safety Disclosures.
Not applicable.
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Part II
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