January 28, 2016 Comments (0) Blog

UBS ETRACS 2xMonthly Leveraged Long Alerian MLP ETN Securities Investigation

(Last Updated On: March 31, 2017)

Did you invest in UBS ETRACS 2xMonthly Leveraged Long Alerian MLP ETN?  If so, the securities attorneys of The White Law Group may be able to help you recover your losses against the brokerage firm that recommended the investment.

The UBS ETRACS 2xMonthly Leveraged Long Alerian MLP ETN is designed to track a leveraged investment in the Alerian MLP Infrastructure Index (the “Index”), and pay a variable quarterly coupon linked to the leveraged cash distributions associated with the underlying MLP constituents, less financing costs and investor fees.  According to UBS,the Index, comprised of 22 energy infrastructure MLPs, is a liquid, midstream-focused subset of the Alerian MLP Index (NYSE: AMZ). The Index, whose constituents generally earn the majority of their cash flow from the transportation and storage of energy commodities, provides investors with a benchmark for the infrastructure component of this emerging asset class.

On December 4, 2015, UBS  announced that it had suspended sales of the UBS ETRACS 2xMonthly Leveraged Long Alerian MLP ETN.  Then, on January 20, 2016, it announced the mandatory redemption of the ETN, stating in the press release “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’).”

UBS has also disclosed that the UBS ETRACS 2xMonthly Leveraged Long Alerian MLP ETN is down over 61% over the last 6 months and 65% over the last year.  This is not surprising given the performance of the index and the drop of oil and gas prices during the time period, but the redemption likely did catch investors off guard (investors that now have to lock in their losses with the mandatory redemption and closing of the investment).  The redemption is also surprising for an investment that started in 2010 and was intended to run for several decades.

The White Law Group continues to investigate the liability brokerage firms (including UBS) may have for recommending MLPL and other UBS ETRACS 2x Leveraged ETNs to their clients.  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 invested in the UBS ETRACS 2xMonthly Leveraged Long Alerian MLP ETN 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.