UBS ETRACS Losses? You May Be Able to Get Your Money Back
If you are one of the investors who sunk money into UBS Financial Services ETRACS exchange trade notes (ETNs) and have realized significant losses — especially since the COVID-19 pandemic started causing global market volatility — you may have legal rights leading to financial recovery.
Zamansky LLC’s Wall Street champion attorneys are pursuing these claims and offer the following to help you understand what happened to your investments and what you might be able to do about it.
UBS ETRACS Losses: Hitting the Most Vulnerable the Hardest
A lot of average investors — people like you seeking a stable source of income, many in their retirement years — have been hit hard by the losses they have realized from failed UBS ETRACS securities. Like you, these investors would never have made this type of investment if they had understood the inherent risks in investing in market-linked UBS securities like the following:
- ETRACS Monthly Pay 2xLeveraged U.S. High Dividend Low Volatility ETN (HDLV)
- ETRACS Monthly Pay 2xLeveraged US Small Cap High Dividend ETN (SMHD)
- ETRACS Monthly Pay 2xLeveraged Diversified High Income ETN (DVHL)
- ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN (CEFL)
- ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN (CEFZ)
- ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index ETN (BDCL)
- ETRACS 2xLeveraged Long Wells Fargo Business Development Company ETN (LBDC)
- ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN (MORL)
- ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN (MRRL)
- ETRACS Monthly Pay 2xLeveraged MSCI US REIT INDEX ETN (LRET)
- ETRACS 2x Monthly Leveraged Alerian MLP Infrastructure Index ETN (MLPQ)
- ETRACS Monthly Reset 2xLeveraged ISE Exclusively Homebuilders ETN (HOML)
- ETRACS 2xMonthly Leveraged S&P MLP Index ETN Series B (MLPZ)
- ETRACS Monthly Pay 2xLeveraged Wells Fargo MLP Ex-Energy ETN (LMLP)
- ETRACS ProShares Daily 3x Inverse Crude ETN linked to the Bloomberg WTI Crude Oil Subindex (WTID)
The Hidden Risks of UBS ETRACS ETNs
UBS Financial Services touted its UBS ETRACS exchange trade notes (ETN) to customers as a stable source of income. And while they — and the brokers and financial advisors who pushed these products — had a responsibility to fairly represent the risks associated with the market-linked notes, they often failed miserably in this regard.
For example, those responsible for selling these securities usually did not always explain to investors that calculating interest based on these investments is not a simple matter. In fact, these calculations are so complex that they are beyond the financial sophistication of most seasoned investors. The vast majority of conservative investors like retirees and people who need to preserve principal and count on investment income to supplement their Social Security, had no clue how these investments really work. Few of these conservative investors had the financial background or education to understand the ins and outs — including the negative impact of market volatility — of the complicated UBS ETRACS ETN investments their brokers and investment advisers put them in.
Their advisers did not tell them that putting their money into UBS ETRACS that back things like oil prices and energy pipelines (sometimes leveraged to the tune of 200 percent) were vulnerable to the manipulation of oil-rich countries and markets. They never mentioned the possibility that something like the UBS MORL ETN could lose 95 percent of its value in just a single month.
Worst of all, they didn’t tell them that, according to investment terms, any time certain UBS ETRAC ETNs decreased 60 percent in value from the previous trading day, they would be subject to mandatory redemption, leaving investors with no recourse but to sell their shares at unbelievably high losses.
Your Loss Was UBS Financial Services’ (and Your Broker’s) Gain
While you and other UBS ETRAC ETN investors are left with substantial losses, UBS Financial Services and the brokers and financial advisors made a lot of money when they sold you these risk-laden securities.
In fact, UBS Financial Services was so intent on pushing the sale of its ETRACS ETN products to everyone — including unknowing and unsophisticated investors — consumers like you, that it offered substantial fees and commissions to act as incentives so brokers would peddle these investments to their customers.
Ready to Fight Back? You May Have Recovery Options
If UBS ETRACS ETN securities ended up in your portfolio without your having a reasonable understanding and appreciation of the risk inherent in these investments, you may be able to recover your UBS ETRACS losses by making a case for investment fraud.
All investments carry risk, so the mere fact that an investor lost money in the financial markets does not mean that he or she was necessarily a victim of fraud. But in cases where there are additional facts — such as a showing that the investment was inherently risky and wholly unsuitable for an unsophisticated investor — fraud claims are supported.
When an investor has a securities fraud claim, they can seek to bring it before the Financial Industry Regulatory Authority (FINRA) for arbitration. FINRA has oversight over all major brokerage firms operating in the United States —including UBS Financial Services— and these firms are required to arbitrate loss claims filed by individual investors.
Schedule a Free Initial Consultation About Your UBS ETRACS Losses with a Top Securities Fraud Attorney
If you would like more information about how you might be able to recover for your UBS ETRACS losses, we encourage you to contact Zamansky LLC for a free, no-obligation consultation. To speak with one of our highly-experienced investment fraud attorneys in confidence, please call (646) 475-7759 or complete our contact form now.