December 5, 2014 Comments (0) Blog, Securities Fraud

Investigation into Strategic Return Notes

(Last Updated On: July 17, 2015)

Have you suffered investment losses in Strategic Return Notes (SNRs)? If so, The White Law Group may be able to help you recover your investment losses through a FINRA arbitration claim against the broker-dealer that sold you the investments.

According to reports, certain state securities regulators have been looking into complaints pertaining to Strategic Return Notes. Strategic Return Notes are complex structured products linked to the Investable Volatility Index. Many investors, and likely even some brokers that sold the notes, did not adequately understand the product or the level of risk involved.

Securities products that are rendered “complex” present additional risks to investors. As such, the Financial Regulatory Authority (FINRA) has recommended specific rules and guidelines regarding the solicitation of complex products to investors. Broker-dealers, in selling such investments, are expected to heighten supervisory and compliance procedures to ensure that investment recommendations are appropriate for each individual investor.

According to FINRA, potentially complex products included “investments tied to performance of markets that may not be well understood by investors.” The Strategic Return Notes (SRNs) are linked to a custom index that provides a measure of market volatility in the equity markets.

More specifically, the SRNs preliminary pricing material states that “The Index is designed to measure the return of an investment in the forward implied volatility of the S&P 500 Index for a three month period with a mid-point approximately five months in the future.” Clearly, the intricacies of SRNs are not easy to discern and it is likely that many investors were misinformed on how the product would perform.

The White Law Group is investigating the liability that some broker-dealers may have for recommending Strategic Return Notes to their customers. When making investment recommendations, brokers are required to have a reasonable basis for believing that their client has the knowledge and experience in financial matters in order to understand the features of the products and evaluate the risks.

Furthermore, broker-dealers have a responsibility to adequately supervise their registered representatives in order to protect clients from unsuitable investment recommendation. When it comes to complex products, like SRNs, even experienced financial advisor may have trouble discerning the products features and understanding how the product will perform in various time periods and market conditions. Investors should not have to pay for unsuitable investment recommendations.

If you purchased SRNs and would like to discuss your litigation options to recover investment losses, please call the securities attorneys of The White Law Group at (312)238-9650 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.

For more information on the firm, visit www.WhiteSecuritiesLaw. com.

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