VelocityShares 3x Long Crude Oil ETN Losses Investigated

Energy Exchange Traded Products Including VelocityShare 3x Long Crude Oil ETN Tank

As market volatility continues to wreak havoc on different investments in the wake of COVID-19, our securities fraud lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) are fighting for investors needing to recover their losses.

Last month, a huge market-sell off caused Leveraged Energy Traded Products (ETPs), including the VelocityShares 3x Long Crude Oil ETN (UWT), to plunge in value.

Please contact SSEK Law Firm if you are a Leveraged Energy ETP investor who experienced significant losses so that we can help you determine whether you have grounds for a stockbroker fraud claim.

Leveraged Energy ETPs Had Steep Losses But Some Traders Were Undeterred

Leveraged energy ETPs typically look to give investors an enhanced daily or monthly return on a subsector of the energy markets. They can be comprised of oil service stocks, refiners, crude or natural gas products, or master limited partnerships (MLPs). These ETPs can either be inversed or long and they utilize futures contracts to achieve their objectives.

While Leveraged and Inverse Energy ETPs may be able to take advantage of short-term market activity, they can also be risky with holding periods on an order lasting just days or mere hours. This can prove financially perilous, as it did on March 9th for the VelocityShares 3x Long Crude Oil ETN, which as ETF.com noted, “tanked.”

What that means is that it underwent a 73.8% drop that was “just shy” of the threshold noted for automatic acceleration in its prospectus, meaning that it barely avoided “closure.”

The majority of ETNs include an automatic closure/ acceleration with their prospectus that signifies the moving up of its due date. It’s at this point that investors would receive notice of cash value rather than when the investment was scheduled for closure. Fortunately for investors, this VelocityShares ETN resets daily.

Other investments that also experienced serious drops during the sell-off were Direxion Daily Natural Gas Related Bull 3x Shares (GASL) and Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 3X Shares (GUSH).

Yet, the Leveraged Energy ETP losses don’t seem to have deterred traders, That same day, the VelocityShares 3x Long Crude Oil ETN experienced an inflow of $289M. Considering that brokers and their firms are obligated to act in their customers’ best interests, if investors were exposed to unnecessary risks that resulted in losses involving Leveraged Energy ETPs, this could be grounds for an investor fraud claim.

Leveraged Energy ETP Lawyers

Throughout the US, SSEK Law Firm is speaking to Leveraged Energy ETP investors and helping them determine exactly what caused their losses. While many people are blaming COVID-19 for the devaluing of investments in their portfolio, stockbroker fraud or negligence may also have been at play.

Contact our Leveraged Energy ETP attorneys today. Over the last 30 years, SSEK Law Firm has recovered many millions of dollars on behalf of thousands of investors.