If you are reading this article, we are guessing you invested in some of those high-dividend paying UBS ETRAC Exchange Traded Notes (ETNs) your stockbroker recommended to increase your retirement income. We would not be surprised if you were also told the UBS ETRAC investments had a proven track record of great returns. You probably also heard: No need to worry about these investments because they were backed by one of the largest brokerage firms in the world – UBS Financial Services, Inc. (UBS). We’re not shocked because that is just what many other investors have told us about the pitch made to them to invest in UBS ETRACs.
Regardless of what you were told, we will bet (dollars for donuts) you didn’t know that you were going to be forced to liquidate your investment at the price UBS set and realize a loss on your investment. Well, if you owned the following UBS ETRAC ETNs, you certainly discovered in March 2020 that UBS could declare a mandatory redemption and force you to sell them back to the company at a loss:
- ETRACS Monthly Pay 2xLeveraged Dow Jones Select Dividend Index ETN due May 22, 2042
- ETRACS – Pro-Shares Daily 3x Inverse Crude ETN linked to the Bloomberg WTI Crude Oil Sub-index ER due January 4, 2047
- ETRACS Monthly Pay 2xLeveraged MSCI US REIT Index ETN due May 5, 2045
- ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN due December 10, 2043
- ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN Series B due December 10, 2043
- ETRACS Monthly Pay 2xLeveraged Diversified High Income ETN due November 12, 2043
- ETRACS Monthly Pay 2xLeveraged Wells Fargo MLP Ex-Energy ETN due June 24, 2044
- ETRACS Monthly Pay 2xLeveraged MSCI US REIT Index ETN due May 5, 2045
- ETRACS – Pro-Shares Daily 3x Inverse Crude linked to the Bloomberg WTI Crude Oil Sub-index ER due January 4, 2047
- ETN ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN due December 10, 2043
- ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN Series B due December 10, 2043
- ETRACS 2xMonthly Leveraged Alerian MLP Infrastructure Index ETN Series B due February 12, 2046
- 2×Leveraged Long ETRACS Linked to the Wells Fargo® Business Development Company Index due May 24, 2041
- 2×Leveraged Long ETRACS Wells Fargo® Business Development Company Index ETN Series B due May 24, 2041
- ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN due October 16, 2042
- ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN Series B due October 16, 2042
- ETRACS 2xMonthly Leveraged S&P MLP Index ETN Series B due February 12, 2046
- ETRACS Monthly Pay 2xLeveraged US Small Cap High Dividend ETN due February 6, 2045
What exactly were those so-called investments in the UBS ETRAC ETNs? The first thing you needed to know when you purchased those structured products was that you were not investing—you were speculating! They were high risk bets that you might receive some dividends in a complex product managed by UBS fund managers with multiple conflicts of interest. The UBS ETRAC ETNs were exotic derivative products that not even the most sophisticated institutional investors could understand and calculate the returns one might earn. These products were simply unsecured debts of UBS, and if UBS went bust (like Lehman Brothers), the ETNs UBS sold you would be worthless (like the Lehman Brothers-Principal Protected Notes UBS pushed on its clients a decade ago).
The UBS ETRAC ETNs were derivatives that tracked an index of various income producing investments, like mortgage real estate investment trusts, closed-end funds, oil and gas master limited partnerships, andbusiness development companies. Unlike another “ET” (extra-terrestrial) investment known as Exchange Traded Funds (ETFs), the UBS ETRAC ETNs did not buy any shares in any of the indexes. The manager of the ETNs tracked the index performance and decided if and when you get a dividend payment after some very murky math by a quant holed up in an UBS office somewhere in the world. And for those of you who bought any of the UBS ETRAC ETNs beginning with the 2X or 3X, you were leveraged 2 to 3 times the amount of each dollar deposited in the fund. By the way, you also paid extra fees for the 2X to 3X leverage and privilege of losing your money twice or three times as fast as other investors.
While these investments may have been suitable for a financial institution making a short term bet on a particular income sector, they were never suitable for any investor with a conservative or moderate risk tolerance seeking a steady stream of income for their retirement. Unfortunately, many financial advisors, intentionally, recklessly and/or negligently did not represent them truthfully or explain all of the risks of these structured products to those type of investors.
There is no way you will recover your losses on these structured products without some legal action. Do you think UBS lost any money on those forced redemptions? At The Law Offices of Robert Wayne Pearce, P.A., we represent investors in UBS ETRAC ETNs and all kinds of structured product investment disputes in FINRA arbitration and mediation proceedings. The claims we file are for fraud and misrepresentation, breach of fiduciary duty, failure to supervise, and unsuitable recommendations in violation of FINRA rules and industry standards. Attorney Pearce and his staff represent investors across the United States on a CONTINGENCY FEE basis which means you pay nothing – NO FEES-NO COSTS – unless we put money in your pocket after receiving a settlement or FINRA arbitration award.
CONTACT US FOR A FREE INITIAL CONSULTATION WITH EXPERIENCED STRUCTURED PRODUCT INVESTMENT ATTORNEYS IN FINRA ARBITRATIONS
The Law Offices of Robert Wayne Pearce, P.A. have highly experienced lawyers who have successfully handled many structured product cases and other securities law matters and investment disputes in FINRA arbitration proceedings, and who work tirelessly to secure the best possible result for you and your case. For dedicated representation by an attorney with over 40 years of experience and success in structured product cases and all kinds of securities law and investment disputes, contact the firm by phone at 561-338-0037, toll free at 800-732-2889 or via e-mail.
Rate this Post
Loading...