Our Exchange Traded Note Lawyer Breaks Down ETNs

ETNs are issued by banks or large institutions. The issuers agree to pay holders the return on an index over time and to return the investment principal at maturity. But if the institution that issues the ETN fails or goes bankrupt, it’s unable to pay holders the return they’re owed. The initial investment could be near worthless.

ETNs and Daily Performance

Some ETNs purportedly promise to pay double or another multiple of the performance of the underlying index or benchmark. An ETN offering “2X” leverage is supposed to pay double the performance of the index that it tracks.

An inverse ETN, conversely, intends to pay the opposite of the performance of the index or benchmark it tracks. However, some ETNs in general aim to achieve their performance objectives daily and then reset their goals each day. But an ETN that’s set up to achieve double the performance of a benchmark on a daily basis will not necessarily achieve twice the performance over weeks, months, or a longer period of time. Given their daily-oriented structure, these ETNs often fail to deliver longer-term gains conducive to buy-and-hold investing.

These types of ETNs are better suited for short-term trading. Other types of ETNs have monthly resets and may be more suitable for longer-term investing. If a broker has made unsuitable investments with your account, including improperly handled ETNs, it’s time to speak with our exchange traded funds lawyers.

Why Do People Buy ETNs? Our ETN Lawyer Explains.

ETNs are somewhat niche investment tools, and ones that brokers can use to their own advantage. Still, there are certain potential advantages to investing in ETNs. And, as our ETN attorney has seen, there are definite risks. Here are some reasons why brokers and investors purchase ETNs:

• Exchange traded notes promise to deliver returns of a particular index not available through exchange traded funds.
• ETNs are designed to pay the exact return of an index, meaning there’s little risk of tracking error. The ETN should closely match the performance of the index and, unlike ETFs, pledge to pay the exact return to investors.
• Taxes on ETNs have been paid only when they’re sold for a gain. ETNs do not issue dividends or interest, so taxes are deferred as capital gains.

Even though ETFs may carry less risk than ETNs, they are still subject to mismanagement by brokers. Speak with an ETF fraud lawyer if you’ve lost money with exchange traded fund investments.

If your Financial Advisor has recommended ETNs and ETFs and you experienced investment losses, you may be entitled to pursue claims for recovery in FINRA arbitration. Contact Wolper Law Firm at 954.406.1231 / 800.931.8452 to discuss your legal options.

Why Choose Our ETF Fraud Lawyer?

Trust, Experience, Results

The attorneys at the Wolper Law Firm seek to recover investment losses for clients nationwide. But more so, they work hard to build relationships with each client, fully learn about their situations, and help them recover losses from mismanaged investments. If your investment portfolio included ETNs and you’ve lost money, consult our exchange traded note lawyer.

At the Wolper Law Firm, our results speak for themselves. In 99% of the cases we’ve handled, we’ve recovered money for wronged investors. After reviewing your case, we hope to be able to help you recover money and hold irresponsible brokers to task.

You can trust that an ETN lawyer from the Wolper Law Firm has the experience needed to guide you through your case and to even take a brokerage to trial. By partnering with an exchange traded note attorney from our firm, your case will be in capable hands.

How Our Exchange Traded Funds Lawyers Can Help

An ETF fraud lawyer from our firm can review your case and situation to see how we can help. Our legal team will look into the details of your ETFs and ETNs to see if a broker’s mishandling of funds led to investment losses.

While investing carries risk, brokers must be transparent about risks and about handling your funds with your best interests in mind. Our exchange traded funds lawyers know how to dig into the details of your investments in order to hold brokerages accountable. Poor investment advice, especially involving risky investments and ETNs, should have consequences.

Call our exchange traded note lawyers at 954.406.1231 / 800.931.8452. By offering free consultations, we can learn more about you and tell you about how we can help with your case.

Differences between ETFs and ETNs: Our ETF Fraud Lawyer Explains

Exchange traded funds, or ETFs, differ from exchanged traded notes. ETFs are sometimes grouped with ETNs, but they differ in makeup and investment intent. ETFs consist of a basket of underlying stocks or bonds and are often a lower-cost alternative to mutual funds. ETFs follow an equity-like legal structure, as opposed to a bond-like legal structure that ETNs follow. Certain ETFs are sector specific, such as those that focus only on technology stocks listed on NASDAQ.

For several reasons, ETNs differ from ETFs. Unlike ETFs, ETNs do not have a board of directors governing them. Management of an ETN is determined solely by the issuer, with no board to keep investors’ interests in mind. ETNs, and those who manage them, could conduct proprietary trading or hedging, without oversight.

Unlike ETNs, ETFs are considered legally separate from the company or institution that manages them. By being structured like a trust or limited partnership, ETFs will remain intact even if the company behind them shuts down or goes bankrupt. ETFs, unlike ETNs, are also subject to oversight by a board of directors who are responsible for looking out for investor interests.

ETNs, Risk, and Contacting an ETN Attorney

Brokers and investors purchase ETNs because they believe that this more specialized investment can help increase gains through a unique investment tool. But as ETN lawyers and exchange traded fund lawyers have seen, the risks can be dire. Relying on ETNs’ performance can be reckless. Exchange traded notes carry risk, as described below:

• ETN trading activity varies widely, and some experience low trading activity. This means that the spread and return potential can vary greatly, leading to potentially larger gains and, of course, losses.
• The issuers of ETNs must remain credit worthy for the ETNs to hold value. As with unsecured bonds, if the issuer defaults, investors will lose out on their ETNs.
• ETNs are created only by their issuers, who essentially issue new debt each time new ETNs are released. Investors who purchase ETNs at a premium can lose out if the premium dissipates or the note is called by the issuer.
• ETNs can experience abrupt closure. For example, the note could be delisted from exchanges and no longer issued. This often leaves investors in a tough spot, who must either wait at length until the note matures or try to trade the ETN, which is subject to very wide spreads.

If you’ve lost money at the hands of an investor trading exchange traded notes, you should speak with an exchange traded note attorney at the Wolper Law Firm.

Exchange traded notes, or ETNs, are essentially bonds issued by a financial institution and traded on a public exchange. But these types of investments carry substantial risk and can be prone to misuse.

Contact an Exchange Traded Note Attorney at Wolper Law Firm Today

We Can Help Recover Investment Losses

If your Financial Advisor has recommended ETNs and ETFs and you have experienced investment loss, you may be entitled to pursue claims for recovery in FINRA arbitration. Contact the Wolper Law Firm at 954.406.1231 / 800.931.8452 for a free consultation to discuss your legal options.

Don’t settle for having to live with lost money as a result of poor investment advice or mishandled money. Instead, let our experienced attorneys help you.