Structured Products Are Not Suitable for Most Retail Investors
Investment Lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) are looking into claims of losses involving JPMorgan Chase Auto Callable Contingent Interest Notes. Which is connected to the S&P GSCI® Crude Oil Index Excess (SPGCCLP). This index tends to reflect the theoretical performance of a trader selling and buying crude oil futures.
What Is An Auto Callable Contingent Interest Note?
Auto Callable Note is a complex, structured product and usually, an investment vehicle based on a single security, index, commodity, debt issuance, foreign currency, or basket of securities. Auto-callable notes tend to be short-term market-linked products that provide an above-market coupon if they automatically mature before the set maturity date.
Structured products with a set maturity date offer risk-return trade-offs that create a preset formula for the possible risks and returns. However, this is not the kind of investment that is suitable for most retail investors. Yet financial firms, such as JPMorgan Chase, have been creating auto-callable notes and selling them to retail customers who lack the investing experience or risk tolerance level to handle the losses that can result.
Agreeably, there are potential benefits, such as the possibility of high returns and the chance of exposure to assets that this type of investor might otherwise not be able to access. However, there are also possible risks. Including exposure to further damages or issues that might not be recoverable. if losses occur, there could be an underlying asset reaching a certain threshold. If this happens, an investor could lose the income stream from the investment or their principal.
While the investment banks that sell auto callable contingent interest notes have profited significantly through the high fees and commissions that they charge.
JPMorgan Brokers Allegedly Misrepresented The Risks
Suppose an investment product and its risks are difficult to explain to an investor. Financial advisors should make sure that they present this product in a way that a customer can understand all the possible risks.
Unfortunately, investors who allegedly purchased JPMorgan Chase Auto Callable Contingent Interest Notes tied to the S&P GSCI® Crude Oil Index Excess may not have been apprised of all of the risks. This is why many of them were not expecting to sustain significant losses when COVID-19 and the other adverse events that followed heavily impacted oil prices and their investments.
What If Your Broker Didn’t Understand The Risks Either?
Structured products can be complex and sometimes, even the financial advisor may not fully comprehend a particular investment. Brokers must make sure that any investment they recommend is a good fit for an investor, while appraising to the client that there could be risks involved which are easy to comprehend.
Your broker-dealer must make sure that the registered representatives conduct the necessary steps with due diligence to fully understand any financial instrument they recommend to a customer and ensure its suitability for the latter, according to their specific investing goals and risk tolerance level. Losses resulting from brokerage firm negligence can be grounds for a Financial Industry Regulatory Authority (FINRA) arbitration claim to pursue damages.
Seasoned Structured Product Investor Lawyers
For over 30 years, SSEK Law Firm has been fighting for investors and their financial recovery against the largest broker-dealers on Wall Street. We have helped thousands to pursue and receive damages caused by broker misconduct or negligence.
If you are an investor who has suffered losses in structured products, you may be able to recover damages from your registered representative and their broker-dealer by filing a Financial Industry Regulatory Authority (FINRA) arbitration claim.
Call SSEK Law Firm at (800) 259-9010 today.