The Ghost of ‘Volmageddon’ Is Back to Haunt New Volatility Funds

Forget a Bitcoin ETF. For many Wall Street stock traders the most eagerly awaited exchange-traded funds are just as speculative -- and even more controversial.

Known as short-volatility products, a fresh twist in a legal battle is bringing these strategies riding calm markets back into the limelight at a time when at least three issuers are trying to launch new funds.

A New York appeals court ruled late last month that Credit Suisse Group AG must face allegations it engineered the implosion of its VelocityShares Daily Inverse VIX Short Term notes (ticker XIV), the central event in an episode ...