United
States Oil Fund, LP (“USO”) was named as a defendant in a complaint dated August 10, 2020 (docketed August 19, 2020),
filed by purported shareholder Darshan Mehan, asserted derivatively on behalf of USO, against defendants United States Commodity
Funds LLC (“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, and USO as a nominal defendant. The complaint is pending in the Superior Court
of the State of California for the County of Alameda as Case No. RG20070732.
The
complaint alleges that the defendants breached their fiduciary duties to USO and that USCF failed to act in good faith in connection
with a March 19, 2020 offering and 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 plaintiff alleges that the defendants possessed inside
knowledge about the consequences of these converging adverse events on USO and did not sufficiently acknowledge them until after
USO suffered losses and was allegedly forced to abandon its investment strategy. The complaint seeks compensatory damages at an
amount be determined at trial, restitution, equitable relief, attorney’s fees and costs.
USCF, USO and the other defendants
intend to vigorously contest such claims and move for their dismissal.
USO
previously reported the filing of a putative class action against USO and certain of its officers summarized in the Current Reports
on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on June 23, 2020 and July 14, 2020. USO may
have additional actions filed against it based on similar allegations as those that were made in the putative class actions and
the shareholder derivative complaint that have been reported. The class actions and shareholder derivative complaint that have
been reported to date, as well as any additional actions or complaints including similar allegations, will be reported, to the
extent material, in USO’s quarterly report on Form 10-Q for fiscal quarter ended September 30, 2020 to be filed with the
SEC.
On
August 19, 2020, USCF, USO and John Love received a “Wells Notice” (the “Wells Notice”) from the staff
of the U.S. Commodity Futures Trading Commission (the “CFTC”). The 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 Commodity Exchange Act, 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 CFTC staff in the Wells Notice and expect to engage in a dialogue with the CFTC staff regarding this matter.
* * *
Statement Regarding Forward-Looking
Statements
This
Current Report on Form 8-K includes “forward-looking statements”, including statements regarding any future litigation
involving USO, which generally relate to future events or future performance. In some cases, you can identify forward-looking statements
by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “predict,” “potential” or the negative of these terms or
other comparable terminology. All statements (other than statements of historical fact) included in this Current Report on Form
8-K that address activities, events or developments that will or may occur in the future are forward-looking statements. These
statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions
and analyses USO and USCF have made based on expected future developments, as well as other factors appropriate in the circumstances.
Whether or not actual results and developments will conform to USO’s and USCF’s expectations and predictions, however,
is subject to a number of risks and uncertainties, including, but not limited to; those discussed in USO’s filings with the
SEC; changes in inflation in the United States; movements in U.S. and foreign currencies; significant market volatility in the
crude oil markets and futures markets attributable to the coronavirus (COVID-19) pandemic, disputes among oil-producing countries
over the potential limits on the production of crude oil, a corresponding collapse in demand for crude oil and a lack of on-land
storage for crude oil; uncertainties associated with the impact from the COVID-19 pandemic, including its impact on the global
and U.S. capital markets and the global and U.S. economy, the length and duration of the COVID-19 outbreak in the United States
as well as worldwide and the magnitude of the economic impact of that outbreak, the effect of the COVID-19 pandemic on USO’s
business prospects, including its ability to achieve its objectives, and the effect of the disruptions caused by the COVID-19 pandemic
on our ability to continue to effectively manage our business. Consequently, all the forward-looking statements made in this Current
Report on Form 8-K are qualified by these cautionary statements, and there can be no assurance that the actual results or developments
USO and USCF anticipates will be realized or, even if substantially realized, that they will result in the expected consequences
to, or have the expected effects on, USO’s operations or the value of the shares.