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Zamansky LLC Investigates Strategic Return Notes Sold to Merrill Lynch Brokerage Customers

June 22, 2016 Investigations

Zamansky LLC is investigating claims for investors to recover losses suffered by Merrill Lynch brokerage customers who purchased Strategic Return Notes (“SRNs”).  In 2010, Merrill Lynch and Bank of America created the Strategic Return Notes which are notes with a maturity which do not pay interest but repay investors a variable amount based upon the performance of an underlying index, the Investable Volatility Index (“VOL”).   The Strategic Return Notes have performed abysmally as $10 notes have fallen to fifty cents, for a more than 90% loss to investors.

On June 22, 2016, the Wall Street Journal reported in an article “SEC Probes Notes Issued By Merrill,”  that the SEC was investigating Merrill Lynch over the Strategic Return Notes. According to the article, Merrill Lynch financial advisors did not understand the “roll risk” costs involved in the notes, which were described by one as “borderline criminal.”

According to investment fraud attorney, Jake Zamansky, “the VOL is a complicated index which measures the volatility of the S&P 500, essentially attempting to calculate how volatile the stock market as a whole is and predict how volatile it will be in the coming months.  If the computation indicates that the market will be less volatile, or that the market will fluctuate less in the time period, then the index falls.  Conversely, if the computation indicates that the market will be more volatile in the coming months, then the index rises.”

As a result, Zamansky says that the Strategic Return Notes gain or lose money based not upon how high the stock market rises or how low it falls, but rather on how wildly the market was swinging on the way there.  Therefore, he states, it is difficult for investors to grasp the risks of these Strategic Return Notes and whether they were a suitable investment for them or not.

Zamansky LLC’s investigation is focused on whether Merrill Lynch brokerage customers who lost money from the Strategic Return Notes knew the risks, and whether these investments were suitable for them.

What  Investors Can Do

If you would like to discuss your legal rights and whether you can recover your losses from any investment sold to you, you may, without obligation or cost to you, email jake@zamansky.com or call the law firm at (212) 742-1414.