November 25, 2016 Comments (0) Blog, Current Investigations

VelocityShares Investment Losses

(Last Updated On: January 11, 2017)

Are you concerned about your investment losses in the VelocityShares Daily 3x Long Crude ETN or Velocity Shares Daily 3X Inverse Crude Oil ETN?  If so, the securities attorneys of The White Law Group may be able to help you recover those losses through a FINRA arbitration claim against the brokerage firm that recommended the investment.

VelocityShares Daily 3x Long Crude ETN and Velocity Shares Daily 3X Inverse Crude Oil ETN are exchange-traded note issued by Credit Suisse AG (Nassau Branch). The Notes were supposed to supply investors with cash payments at the scheduled maturity or early redemption based on the performance of the underlying index, S&P GSCI Crude Oil Index ER.

As we told you in March, the VelocityShares Daily 3x Long Crude ETN at that time were down over 61% year to date and over 95% in the past 12 months.

Now there is more bad news for investors. The Credit Suisse notes were delisted with more than $740 million in assets according to a Nov. 16 statement. Apparently, the desk at Credit Suisse that monitors the bank’s risk exposure may have decided to dump the notes when evaluating the liability of a fast-growing, leveraged product.

The problem with the VelocityShares Daily 3x Long Crude ETN and VelocityShares Daily 3X Inverse Crude Oil ETN is that they are extremely risky and easily misunderstood. VelocityShares Daily 3x Long Crude ETN, and other leveraged exchange-traded note (ETN), use financial derivatives and debt to amplify the returns of an underlying index. These are high-risk trades that should be seen as just that: trades. They should not be approached as investments.

Also, these are not an investment to be held long term.  So even if you or your financial advisor thought that the price of oil was going to rebound or go up, this is still not a vehicle to bet that play long term.  It is a daily trade (completely inappropriate for most investors who are long term “buy and hold” investors).

The White Law Group continues to investigate the liability that brokerage firms may have for improperly recommending the VelocityShares Daily 3x Long Crude ETN and VelocityShares Daily 3X Inverse Crude Oil ETN.

To learn more about the investigation, see Investor Alert- VelocityShares Daily 3x Long Crude ETN.

Interestingly, not long after these Credit Suisse notes ETNs were delisted, CitiGroup has introduced an almost identical product. The new notes are called VelocityShares 3x Long Crude Oil ETN and VelocityShares 3x Inverse Crude Oil ETN.

While the new ETNs are similar in structure and linked to the same S&P GSCI Crude Oil Excess Return Index, there are a few differences between old and new. In particular, the new notes are more expensive.

The Credit Suisse notes, which made bets on oil prices to either climb or plunge, at one point had almost $2 billion in combined market value. But the 3x Long Crude ETN lost about $1 billion in assets over the past two weeks. The bank decided not to liquidate them, which would have returned cash to investors, but delisted instead.

Brokerage firms are required to perform adequate due diligence on the investments they recommend to ensure a reasonable likelihood of success, and to evaluate whether the investments are suitable in light of the client’s age, net worth, investment experience, and investment objectives. Firms that fail to perform adequate due diligence, or that make unsuitable recommendations, can be held responsible for losses in a FINRA arbitration claim.

If you suffered losses investing in VelocityShares Daily 3x Long Crude 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 arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.

For more information on The White Law Group and its representation of investors, visit www.WhiteSecuritiesLaw.com.