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ETRACS ETN Investment Loss Recovery

Losing money on the stock market or through investing is not uncommon, but your stockbroker, financial advisor, or brokerage firm should never be responsible, directly or indirectly, for your losses. 

One investment loss that seems to have significantly impacted many investors are ETRACS ETNs, particularly those sold by UBS Financial Services, Inc. which began in late February 2020. 

Continue reading to learn more about what ETRACS ETNs are, the volatility of the stock market in Spring 2020, and how you could recover your investment losses with the help of a qualified stockbroker negligence lawyer at Wolper Law Firm. 

What Are ETRACS ETNs?

ETRACS ETNs (Exchange Traded Notes) are senior, unsecured, unsubordinated debt securities that track the total return of a certain market index. If this sounds confusing to you, that’s because it is. ETRACS ETNs are a particularly risky and complex investment that can result in substantial losses to investors, even when investors are aware of the risk.

The problem is that many financial advisors fail to disclose these risks to investors, and instead describe them as likely to generate big returns without fully informing the investor of just how risky they are. But what makes ETRACS ETNs so risky? The truth is, they are internally leveraged. This means that the investment vehicle borrows money to purchase additional securities. This can enhance the returns of the ETRACS ETNs or magnify the losses during a down market.

In the spring of 2020, when the stock market crashed and the coronavirus pandemic took its toll on not only the U.S., but the entire world, margin calls were issued everywhere, causing investors to endure considerable losses when they were unable to increase the value of their portfolios.  Within the ETRACS ETNs, those investments experienced internal margin calls and were required to liquidate securities within the collateral portfolio to satisfy the call. This grossly depreciated the asset base and, in turn, the value of the ETNs.

In March 2020, UBS Financial Services, Inc. decided to redeem outstanding notes of several of their offered ETRACS ETNs, including 

  • Monthly Pay 2xLeveraged US Small Cap High Dividend ETN
  • Pay 2xLeveraged Mortgage REIT ETN, tickers MORL and MRRL
  • ProShares Daily 3x Long Crude ETN linked to the Bloomberg WTI Crude Oil Subindex ER (WTIU)
  • VelocitySharesTM 1X Long VSTOXX Futures ETN (EVIX)
  • VelocitySharesTM 1X Daily Inverse VSTOXX Futures ETN (EXIV)

This occurred because the indicative value of these securities plummeted to under the $5 minimum value. There are many more ETRACS ETNs that are subject to redemption which can be found here.

Because ETRACS ETNs are only suitable for investors who are able to tolerate aggressive and speculative risk, you may be entitled to financial recovery through an arbitration complaint. 

Get Help Recovering Your ETRACS ETN Investment Losses

If you purchased ETRACS ETNs from UBS Financial Services, Inc. and endured considerable losses due to your broker’s misconduct, contact a dedicated investment loss lawyer at Wolper Law Firm. You can schedule a free, no-obligation consultation by filling out the online contact form provided below or giving our office a call at 800.931.8452.

Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]