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Investment Loss Attorneys Representing Investors with Steepener Losses Nationwide
If you have lost money investing with steepeners, you will want to speak with an investment loss attorney about your legal rights. Steepeners are among the most complex financial products available on the retail market; and, for this reason, they are not suitable for most retail investors.
Yet, brokers and investment advisors often push these high-risk financial products on their clients. Why? Because with increased risk come increased commissions. Since steepeners have a relatively small market—due to their complexity and volatility—the entities that offer them are willing to pay high commissions to brokers and investment advisors who are able to convince their clients to invest.
How Steepeners Are Supposed to Generate Substantial Returns for Investors
A steepener, or steepener note, is a type of financial product that allows investors to speculate on an interest rate curve. Rather than betting on an interest rate rising or falling, investing in a steepener note involves betting on how quickly the interest rate will rise or fall.
For this reason, steepeners are also commonly referred to as curve steepener trades. If the underlying interest rate’s curve steepens, then investors can achieve significant gains. As one popular online publication explains:
“Curve steepener trades benefit from rising yield differences as a result of an increase in the yield curve of two [treasury bonds] of different maturities. . . .
“The difference between the short-term and long-term yield is known as the yield spread. If the yield curve steepens, this means that the spread between long- and short-term interest rates increases.”
When this happens (when the yield curve is steep), banks can borrow at lower rates while simultaneously lending at higher ones. Steepeners are a type of “derivative” investment, which essentially means that investors’ fortunes are determined by market forces not strictly applied to the investment itself.
This is just part of the reason why steepeners are so complicated—and why they are not suitable investments for most retail investors. While steepeners can generate substantial returns, they can also generate substantial losses. Oftentimes, brokers and investment advisors will get their clients to invest in a series of steepener trades (often without their clients realizing it), generating multiple commissions while increasing their clients’ overall risk of loss.
What You Can Do if You Have Suffered Investment Losses with Steepeners
With this in mind, what can you do if you have suffered investment losses with steepeners? While individual circumstances vary, investors who have been misled into unsuitable high-risk investments may be able to recover their investment losses through FINRA arbitration. The Financial Industry Regulatory Authority (FINRA) regulates brokers and investment advisors in the United States, and it provides a forum for defrauded investors to seek financial compensation.
In the brokerage and investment advisory context, “fraud” can take many forms. This term is defined broadly to include improper practices such as:
- Recommending Unsuitable Investments – Brokers and investment advisors should only recommend financial products that are suitable to their clients—and they must make this “suitability” determination on a case-by-case basis. If a steepener is not suitable for a particular investor—either because of the investor’s level of sophistication or the overall value of the investor’s portfolio—then recommending that the investor speculate with steepener notes can constitute investment fraud.
- Recommending Investments Based on Conflicts of Interest – Recommending steepeners based on a conflict of interest can constitute investment fraud as well. This includes recommending steepeners because of the substantial commissions they offer when investing in these high-risk financial products is not in a client’s best interests.
- Omitting or Misrepresenting Material Information – Regardless of any suitability concerns or conflicts, brokers and investment advisors have a legal duty to provide investors with the information they need to make informed investment decisions. If a broker or advisor omits or misrepresents material information about a steepener note (including the commissions offered), this can give rise to a fraud claim in FINRA arbitration as well.
All of these are common issues that can lead to retail investors speculating with steepeners without a clear understanding of the risks involved. If you believe that one (or more) of these issues may be responsible for your investment losses, your next step should be to consult with an investment loss attorney as soon as possible.
How an Investment Loss Attorney Can Help
If you are facing steepener-related losses and you believe that you may have grounds to hold your broker or investment advisor accountable, how can an investment loss attorney help? Our services for investors include:
- Evaluating the Information You Received from Your Broker or Investment Advisor – We can evaluate the information you received from your broker or investment advisor to assess whether you may have been misled.
- Determining if It Makes Sense to Pursue FINRA Arbitration – If it appears that you have been misled, we can help you determine if it makes sense to pursue FINRA arbitration. This will include calculating the damages you may be entitled to recover as well as your likelihood of success.
- Handling Your Steepener Fraud Claim on Your Behalf – If you decide to pursue FINRA arbitration, we can handle your steepener fraud claim on your behalf. This will include navigating the FINRA arbitration process and negotiating for a settlement, if warranted.
As a general rule, brokerage and advisory firms are responsible for their employees’ misconduct; and, as a result, most successful FINRA arbitration claims result in settlements or awards being paid by the brokerage or advisory firm involved. With that said, there are no guarantees. It is critical to ensure that you have experienced legal representation; and, to maximize your chances of success, you should take legal action as soon as possible.
Speak with an Investment Fraud Attorney at Zamansky LLC
Do you need to know more about seeking to recover steepener investment losses? If so, we invite you to get in touch. To speak with an investment fraud attorney at Zamansky LLC in confidence, give us a call at 212-742-1414 or request a free consultation online today.