What Are Autocallable Structured Notes?
Shepherd Smith Edwards and Kantas Represents Investors of These High-Risk, Complex Investments
If you are an investor who suffered serious losses after your broker marketed and sold you autocallable structured notes, please contact Shepherd Smith Edwards and Kantas (investorlawyers.com) and ask for your free, no obligation case consultation.
These are investments that can be high-risk even for experienced, accredited investors. They are certainly unsuitable for retail investors, conservative retiree investors, and investors with moderate risk profiles.
An autocallable structured note is a type of structured product. It is a debt obligation that has a derivative component with a performance usually tied to an underlying asset or index. This type of structured product can be automatically called by the issuer if the performance satisfies prespecified conditions at a certain time during the product’s term and prior to maturity.
When a structured note is autocalled, payment can vary. Some autocallable structured notes offer a full return of principal, while others may expose investors to a total loss of principal. True, there is a chance of higher yields, but the risk of loss can also be high.
Autocallable structured notes can be very speculative. They pay brokerage firms substantial commissions and fees for selling them to customers.
What Are The Risks Involving Autocallable Notes?
Autocallable structured notes are illiquid. They are not found on any exchange, and there is no guarantee they can be traded on a secondary market. This type of structured product also comes with market risk, especially as a lot of structured notes do not offer the repayment of principal upon maturity. There is even the chance that how the linked asset or index performs can cause an autocallable structured note investor to lose their entire principal.
Depending on the underlying asset or index, other market risks can involve changes in commodity prices, equity, foreign exchange rates, or interest rates. Market volatility can also pose a risk, as can pricing, because the estimated value at the start is usually less than the price of the autocallable structured note.
Because structured notes are unsecured debt obligations, the issuer has to make payments on the notes, including any principal protection it has promised. If the issuer defaults on its payment obligations, this could lead to serious losses, even a total loss of principal for the investor, who also may be on the hook for other payments owed to the structured notes.
What Should You Do If You Suffered Autocallable Structured Note Losses?
Shepherd Smith Edwards and Kantas can determine whether your broker-dealer owes you damages for the losses you suffered. Unsuitable investment recommendations, misrepresentations of the risks, overconcentration, negligence, excessive trading, and other kinds of broker misconduct may have been factors that contributed to you losing money in these risky, potentially volatile investments.
We have been successfully representing structured note investors against brokerage firms, including the largest Wall Street firms, for decades. The majority of our clients have secured awards or settlements in arbitration, mediation, and litigation.
Call (800) 259-9010 or fill out this online contact form and ask for one of our autocallable structured note attorneys.