Exchange traded notes (ETNs) are a type of unsecured debt security that is sold on major exchanges and pays a distribution based on a market index. ETNs are similar to bonds, except they don’t pay interest payments periodically. If you’ve lost money investing in ETNs due to a financial advisor’s negligence or misconduct, you may have grounds for a claim.
An exchange traded note lawyer from our team can assess your losses and determine if taking legal action against your financial advisor or brokerage firm is the right choice for you. Let’s take a closer look at exchange traded notes and how a financial advisor may be responsible for your losses related to this type of security.
Understanding the Risks of Exchange Traded Notes
Investing in exchange traded notes comes with many risks that may make it unsuitable for some investors. If your financial advisor has recommended that you invest in ETNs, you’ll want to discuss the decision with a third party and consider the following risks:
- Since ETNs are unsecured, the investor may lose their money if the issuer defaults
- Investing in ETNs comes with substantial market risk, as the value of a given ETN will fluctuate in response to fluctuations in the index it tracks
- The value of an ETN can be difficult to track on a minute-by-minute basis, thus increasing the chances that you will buy or sell at a loss
- ETNs can have short holding periods, which may result in compounding of the ETN’s multiplier and significant investment losses
These are just a few of the risks associated with exchange traded notes. If your financial advisor has recommended this type of investment, you’ll want to speak with them about the potential downsides of ETNs and how your advisor plans to avoid them.
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How Broker Misconduct and Negligence Can Lead to Exchange Traded Note Losses
Now that you’re familiar with exchange traded notes and the risks associated with them, it’s time to discuss how a financial advisor’s negligence or misconduct may result in considerable ETN investment losses. One way that irresponsible brokers may cause ETN losses is by recommending an unsuitable ETN investment to a client.
Simply put, an unsuitable investment does not match the means and objectives of an investor. Since some exchange traded notes don’t reach maturity for as long as 40 years, investing in an ETN may not be advisable for more senior investors.
If your financial advisor has recommended an unsuitable ETN investment, you’ll want to reach out to a financial advisor negligence lawyer. An attorney can evaluate your situation and determine if you’re eligible to pursue compensation from the at-fault party.
Additional Forms of Broker Misconduct and Negligence to Look Out for
Unfortunately, there are many ways that a financial advisor can knowingly and unknowingly cause you to suffer investment losses. If your advisor has recommended that you invest in exchange traded notes or another type of security, you’ll want to familiarize yourself with the following types of broker misconduct and negligence to avoid unnecessary losses:
- Churning
- Failure to execute
- Lack of agent supervision
- Misrepresentation of the investment
- Unauthorized trading
- Unsuitable investments
- Breach of fiduciary duty
These are only a few types of misconduct to look out for when working with a financial advisor. If you suspect that you’ve lost money due to an advisor’s negligence, misconduct, or outright fraud, don’t hesitate to reach out to an attorney. An investment fraud lawyer can take on your case and fight for the financial remedies you’re owed.
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How an Experienced Attorney Can Help Recover Your Losses
Most disputes between investors and financial advisors are settled through arbitration by the Financial Industry Regulatory Authority (FINRA). During arbitration, both sides of the dispute meet with a qualified arbitrator to discuss the matter at hand and come to an agreement on how to resolve it.
Your lawyer will present evidence and compelling legal arguments at arbitration, working hard to sway the results in your favor. If the arbitration process is successful, you could receive any of the following damages:
- Money you would have made if your investment was managed correctly
- Trading losses
- Dividends
- Interest
- Cancellation of contract with negligent advisor
- Punitive damages
- Attorney’s fees
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Learn More About Exchange Traded Notes and How a Lawyer Can Help You Recover Losses
If you’ve suffered substantial losses on exchange traded notes due to the misconduct or negligence of a financial advisor, we understand how concerned you must be. Investment losses can cause serious financial instability and worry regarding future investment opportunities.
Fortunately, the team at Meyer Wilson can help you hold the at-fault advisor accountable for the losses you’ve taken on. Our firm has over 75 years of combined experience handling cases like yours, so we’re confident we have what it takes to win. Contact us today to schedule a free consultation to learn more about exchange traded notes and get started on your case.
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