Investment Loss Recovery Options For Investors In UBS ETRACS Exchange Traded Notes
The Wolper Law Firm is currently investigating UBS Financial Services, Inc.’s sale of ETRACS Exchange Traded Notes, or “ETRACS ETNs” after clients suffered devastating losses in February and March 2020.
ETRACS ETNs are senior, unsecured, unsubordinated debt securities that are designed to track the total return of a specific market index. Most of the ETRACS ETNs are highly leveraged and, thus, deemed speculative investments. With the increased market volatility in February and March 2020, many of UBS’ ETRACS ETNs were unable to withstand the price movements and have been forced to liquidate, causing massive investor losses.
On March 13, 2020, UBS announced that all outstanding notes of the Monthly Pay 2xLeveraged US Small Cap High Dividend ETN due February 6, 2045 (Ticker: SMHD) would be mandatorily redeemed as a result of the occurrence of an “Acceleration Upon Minimum Indicative Value,” triggered as a result of the indicative value of the securities being less than $5.00 on March 12, 2020.
On March 19, 2020, UBS announced that it was redeeming two more ETRACS ETNs—the Pay 2xLeveraged Mortgage REIT ETN, tickers MORL and MRRL, after the notes fell below a $5 minimum share value. These particular ETRACS ETNs were correlated to the mortgage real estate investment trust (Mortgage REIT) industry, which are essentially leveraged bond or loan funds that invest primarily in real estate debt. The Mortgage REIT industry also experienced precipitous declines in March 2020.
On March 20, 2020, UBS announced redemptions of three additional ETRACS ETNs—the ProShares Daily 3x Long Crude ETN linked to the Bloomberg WTI Crude Oil Subindex ER (WTIU), VelocitySharesTM 1X Long VSTOXX Futures ETN (EVIX), and VelocitySharesTM 1X Daily Inverse VSTOXX Futures ETN (EXIV).
For a link to UBS’ press releases on these redemptions, click https://etracs.ubs.com/whats-new/press-releases
In addition, many other ETRACS ETNs are subject to redemption, including:
• ETRACS Monthly Pay 2x Leveraged MSCI US REIT INDEX ETN (LRET)
• ETRACS Monthly Pay 2x Leveraged Alerian MLP Infrastructure Index ETN (MLPQ)
• ETRACS Monthly Reset 2x Leveraged ISE Exclusively Homebuilders ETN (HOML)
• ETRACS Monthly Pay 2x Leveraged S&P MLP Index ETN Series B (MLPZ)
• ETRACS Monthly Pay 2x Leveraged Wells Fargo MLP Ex-Energy ETN (LMLP)
• ETRACS Monthly Pay 2x Leveraged Wells Fargo MLP Ex-Energy (LMLB)
• ETRACS ProShares Daily 3x Inverse Crude ETN linked to the Bloomberg WTI Crude Oil Subindex (WTID)
• ETRACS Monthly Pay 2x Leveraged U.S. High Dividend Low Volatility ETN (HDLV)
• ETRACS Monthly Pay 2x Leveraged US Small Cap High Dividend ETN (SMHD)
• ETRACS Monthly Pay 2x Leveraged US Small Cap High Dividend (SMHB)
• ETRACS Monthly Pay 2x Leveraged Diversified High Income ETN (DVHL)
• ETRACS Monthly Pay 2x Leveraged Closed-End Fund ETN (CEFL)
• ETRACS Monthly Pay 2x Leveraged Closed-End Fund ETN (CEFZ)
• ETRACS 2x Leveraged Long Wells Fargo Business Development Company Index ETN (BDCL)
• ETRACS 2x Leveraged Long Wells Fargo Business Development Company ETN (LBDC)
ETRACS ETNs are only suitable for investors with an aggressive or speculative risk tolerance. Financial Advisors have a regulatory obligation to fully disclosue all material risks associated with a recommended investment or investment strategy, including the impact that leverage can have on the overall performance of the investment strategy. Failure to make full disclosure constitutes a breach of duty.
The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at firstname.lastname@example.org.
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