Exchange traded notes are high-risk investments that should only be considered by investors with specific risk tolerance, age, and general financial stability. If you’ve lost money due to a financial advisor’s negligence regarding the risk of exchange traded notes, you’ll want to discuss your case with an exchange traded note lawyer.
If an attorney finds that your investment losses resulted from an advisor’s negligence, misconduct, or fraudulent actions, you could have grounds for a claim. If successful, your claim could yield compensation to cover your losses and attorney’s fees. Let’s take a closer look at the risk involved with investing in exchange traded notes and how a lawyer can help you.
Why Exchange Traded Notes Can Be High-Risk Investments
Understanding why exchange traded notes (ETNs) can be high-risk investments can help you determine if investing in this type of security is right for you. Consider the following risks of ETNs before investing any substantial amount of money in them:
- ETNs are unsecured: ETNs are unsecured investments, which means they aren’t backed by any form of collateral. Therefore, if the issuer of an ETN defaults, you may lose all of the money you’ve invested in the ETN.
- Market fluctuation: Another reason why exchange traded notes are high-risk investments has to do with market fluctuations. Since the value of an ETN changes in response to fluctuations in the index it tracks, serious fluctuations could cause significant investment losses.
- Tracking difficulties: Since ETNs are often traded by hedge funds and other high-volume investors, it can be difficult to track ETNs by the minute. As a result, you may accidentally buy or sell at a loss.
- Short holding periods: Since ETNs can have short holding periods, there may be compounding of a given ETN’s multiplier, resulting in considerable investment losses.
These are only a few of the factors that make exchange traded notes high-risk investments. If your advisor or brokerage firm has suggested that you invest in ETNs, you’ll want to talk to them about these potential risks and ask how they plan to avoid them.
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Weigh the Pros and Cons Before Investing in Exchange Traded Notes
When considering a high-risk investment like exchange traded notes, it’s important to weigh the pros and cons. If your financial advisor assures you that the benefits of ETNs outweigh the risks, they could be a sound financial investment for you.
However, some advisors might not have your best interests in mind. If you’ve lost money on an ETN investment due to an advisor’s negligence or misconduct, you have the right to hire a lawyer and pursue compensation for the losses you’ve incurred.
Benefits of Exchange Traded Notes
While exchange traded notes can be high-risk investments, they can offer a number of benefits when used correctly. One advantage of investing in exchange traded notes is that they make it easier to invest in areas that are more difficult to reach with regular stocks and bonds.
Since ETNs don’t pay monthly dividends or interest and they don’t involve yearly capital gains distributions, they are considered long-term capital gains. Therefore, ETNs have a lower tax rate than short-term capital gains. Other benefits of ETNs include the following:
- Liquidity
- Accurate tracking of investment performance
- Add diversity to a portfolio
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Forms of Advisor Misconduct and Fraud an Exchange Traded Note Lawyer Can Combat
If you’ve lost money investing in exchange traded notes and believe it’s the result of financial advisor negligence or misconduct, an attorney can help you get your money back. An experienced lawyer can take action against any of the following forms of advisor negligence, misconduct, and fraud:
- Breach of fiduciary duty
- Failure to execute
- Unsuitable investments
- Lack of agent supervision
- Misrepresentation of the investment
- Failing to warn you that exchange traded notes can be high-risk investments
- Unauthorized trading
- Churning
- And more
These are only a few of the actions that an experienced attorney can hold your advisor responsible for. If you’ve lost money while investing in exchange traded notes because of an advisor’s irresponsible or unlawful actions, an investment fraud lawyer can help you recover damages.
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Schedule a Free Consultation With an Exchange Traded Note Lawyer
Losing money due to investment fraud, financial advisor negligence, and broker misconduct can be devastating, especially if you’ve lost a significant amount of money. Fortunately, the team at Meyer Wilson can help you hold the at-fault advisor accountable and recover compensation for your losses.
Our team has over 75 years of combined experience and has won over $350 million in case results. You can rest assured that we have what it takes to get your money back. Contact us today to schedule a free consultation and learn more about why exchange traded notes are high-risk investments.
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