January 22, 2016 Comments (0) Blog

UBS ETRACS 2x Monthly Leveraged Long Alerian MLP Infrastructure Index ETN due July 9, 2040 Investigation

(Last Updated On: April 5, 2017)

Have you suffered losses investing in UBS’s ETRACS 2x Monthly Leveraged Long Alerian MLP Infrastructure Index ETN due July 9, 2040 (NYSE Arca Ticker: MLPL) (CUSIP: 902664200) (“MLPL”)?  If so, the securities attorneys of The White Law Group may be able to help you recover your losses in a FINRA arbitration claim against the brokerage firm that recommended the investment.

MLPL is an exchange-traded note (the “ETN”) that is designed to track a leveraged investment in the Alerian MLP Infrastructure Index (the “Index”).  Exchange-traded notes trade intraday like exchange-traded funds but are debt instruments, issued by banks, that own no assets.  MLPL pays a variable quarterly coupon that is linked to the leveraged cash distributions associated with the underlying Master Limited Partnerships (“MLPs”) in the Index, less financing costs and investor fees.

According to UBS’s ETRACS Prospectus, “[i]f, at any time, (1) the indicative value on any Index Business Day equals $5.00 or less or (2) the intraday index value on any Index Business Day decreases 30% from the most recent Monthly Initial Closing Level (each such day, an ‘Acceleration Date’), all issued and outstanding Securities will be automatically accelerated and mandatorily redeemed by UBS (even if the indicative value would later exceed $5.00 or the intraday index value would increase from the -30% level on such Acceleration Date or any subsequent Index Business Day) for a cash payment equal to the Acceleration Amount.”  MLPL’s net asset value fell so far, so fast, that it hit the acceleration trigger, and on January 20, 2016, UBS issued a press release announcing “that all outstanding notes of the 2xMonthly Leveraged Long Exchange-traded Access Securities (ETRACS) linked to the Alerian MLP Infrastructure Index due July 9, 2040 (Ticker: MLPL) (the ‘Securities’) will be mandatorily redeemed in accordance with the terms of the Securities as a result of the occurrence of an Acceleration Event, triggered as a result of the intraday index value decreasing by more than 30% from the most recent Monthly Initial Closing Level (as defined in the prospectus supplement relating to the Securities) to below 349.81 on January 20, 2016 (the ‘Acceleration Date’).”

According to Barron’s, UBS announced that shares of both the $11 million ETRACS 2x Monthly Leveraged S&P MLP Index exchange-traded note (MLPV) and $113 million ETRACS 2x Monthly Leveraged Long Alerian MLP Infrastructure ETN (MLPL) will be “mandatorily redeemed.”

Apparently, the net asset values of both ETNs appear to have fallen so far, so fast, that each hit triggers that allow the bank to automatically accelerate redemptions for notes that were set to expire in 2040 and 2045.

The White Law Group is investigating the liability brokerage firms may have for recommending MLPL.  Brokerage firms are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor in light of that particular investor’s age, investment experience, net worth, risk tolerance, investment objectives, and income.  Firms that fail to perform adequate due diligence or that make unsuitable recommendations can be held responsible for investment losses in a FINRA arbitration claim.

If you suffered losses in UBS’s ETRACS 2x Monthly Leveraged Long Alerian MLP Infrastructure Index ETN due July 9, 2040 and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at 888-637-5510 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.  The firm represents investors in FINRA arbitration claims throughout the country.  For more information on the firm, visit http://www.whitesecuritieslaw.com.