On May 4, 2018, Crawley MacKewn Brush LLP  commenced a national class action against Horizons ETFs Management (Canada) Inc. (“Horizons”) relating to its design and management of its BetaPro S&P 500 VIX Short-Term Futures Daily Inverse ETF (“HVI”).


The proposed class for the action is: all people who held units of HVI at the close of business on February 5, 2018.

The Statement of Claim in the proposed class action alleges that Horizons acted negligently by packaging an extremely complex institutional trading strategy into product for sale to retail investors as an exchange traded fund (“ETF”). The strategy in question was a bet against stock market volatility through complex futures instruments. In effect, HVI ‘sold insurance’ against an increase in volatility and took on that risk itself.

The inevitable spike in volatility happened on February 5, 2018.  After HVI lost nearly 90% of its value in a single trading day, Horizons closed down the fund and admitted that the fund did not have an “acceptable risk/reward trade-off for investors”.  

The Statement of Claim seeks damages for Horizons’ negligent design and marketing of HVI as an unsuitable retail investment product that inappropriately exposed investors to the possibility of rapid and catastrophic loss. The class action also seeks relief pursuant to s. 130 of the Securities Act, R.S.O. 1990 c. S.5 relating to the incomplete and materially misleading description of HVI and the attendant risks of purchasing units of HVI.   



Following a hearing held on June 6-7, 2019, the Motion Judge denied certification and dismissed this action. The representative plaintiff appealed the Motion Judge’s decision.

On June 1, 2020, the Ontario Court of Appeal allowed the appeal, set aside the order of the certification judge dismissing the motion for certification and the action, granted leave for the claim to be amended such that a claim can proceed under s. 130 of the Securities Act, and remitted the matter to the certification judge to determine whether the remaining criteria for certification are met.