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Market Volatility Caused by COVID-19 Negatively Impacts Leveraged ETNs & Inverse ETPs

Inverse and Leveraged ETNs and ETFs Are Shuttering

As the novel coronavirus (COVID-19) continues to adversely affect the markets and cause crude oil prices to drop, the number of inverse and leveraged exchange-traded notes (ETNs), exchange-traded funds (ETFs) and exchange-traded products (ETPs) involving crude oil that have been forced to close, delist, or automatically accelerate continues to grow and this has caused more losses for investors.

Right now, our broker fraud lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) are working with leveraged and inverse ETF and ETP investors throughout the US to help them explore their legal options.

List of ETPs That Have Been Impacted:

Below is a list of inverse and leveraged ETNs, ETFs and ETPs that have impacted by the market volatility caused by COVID-19:

  • iPath US Treasury Long Bond Bear ETN (DLBS)
  • iPath US Treasury 10-year Bear ETN (DTYS)
  • Credit Suisse X-Links Monthly Pay 2xLeveraged Alerian MLP Index ETN (AMJL)
  • ETRACS 2xMonthly Leveraged Alerian MLP Infrastructure Index ETN Series B (MLPQ)
  • ETRACS Monthly Reset 2xLeveraged ISE Exclusively Homebuilders ETN (HOML)
  • ETRACS Monthly Pay 2xLeveraged US Small Cap High Dividend ETN (SMHD)
  • ETRACS 2xMonthly Leveraged S&P MLP Index ETN Series B (MLPZ)
  • ETRACS Monthly Pay 2xLeveraged U.S. High Dividend Low Volatility ETN (HDLV)
  • ETRACS Monthly Pay 2xLeveraged Wells Fargo MLP Ex-Energy ETN (LMLP)
  • ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN (MORL)
  • ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN Series B (MRRL)
  • ETRACS Monthly Pay 2xLeveraged Diversified High Income ETN (DVHL)
  • ETRACS ProShares Daily 3x Inverse Crude ETN linked to the Bloomberg WTI Crude Oil Subindex (WTID)
  • ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN (CEFL)
  • ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN Series B (CEFZ)
  • ETRACS Monthly Pay 2xLeveraged MSCI US REIT INDEX ETN (LRET)
  • ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index ETN (BDLC)
  • ETRACS 2xLeveraged Long Wells Fargo Business Development Company ETN Series B (LBDC)
  • ProShares UltraPro Financial Select Sector (FINU)
  • ProShares UltraPro Short Financial Select Sector (FINZ)
  • ProShares UltraPro 3x Short Crude Oil ETF (OILD)
  • ProShares UltraPro 3x Crude Oil ETF (OILU)
  • ProShares UltraPro Nasdaq Biotechnology (UBIO)
  • ProShares UltraPro Short Nasdaq Biotechnology (ZBIO)
  • VelocityShares 3x Long Crude Oil ETN (UWT)
  • VelocityShares 3x Inverse Crude Oil ETN (DWT)
  • VelocityShares 1X Long VSTOXX Futures ETN (EVIX)
  • VelocityShares 1X Daily Inverse VSTOXX Futures ETN (EXIV)
  • ETRACS ProShares Daily 3X Long Crude ETN linked to Bloomberg WTI Crude Oil Subindex ER (WTIU)

Many Investors May Not Have Been Apprised of the Risks

Leveraged and inverse ETPs are not for every investor. Unfortunately, brokers who recommended them may have made unsuitable investment recommendations or failed to apprise customers of the risks they were taking on especially during high volatility moments when massive price fluctuations happen.

In March, many inverse and leveraged ETNs that shuttered were forced to issue a mandatory redemption prematurely–and we’re talking more than 20 years early in some cases. Such early redemptions that happen when markets are in session can lead to an ETN’s price’s dropping under the minimum indicative value. For many investors, this means getting paid much less than they would have otherwise.

As for many of the exchange-traded products that were delisted, causing them to automatically be taken off the exchange, these funds weren’t shuttered. However, investors were left with positions that will be very difficult to liquidate.

Leveraged and Inverse ETP Fraud Law Firm

For 30 years, SSEK Law Firm has represented thousands of investors, including retail investors, high net worth individual investors, and institutional investors. We have recovered many millions of dollars on their behalf, and our commitment to helping those harmed due to broker fraud or negligence even in the time of COVID-19 remains the same.

Your initial consultation with one of our leveraged and inverse ETP fraud attorneys is a free, no-obligation session.

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