Investor Alert: Barclays Bank to Close Funds
According to reports, Barclays Bank, the largest ETN issuer in the U.S., is retiring or replacing roughly half of its U.S. offerings on April 12. The plan affects 50 ETNs with about $1.2 billion in assets, according to Bloomberg data. It appears that many investors are still unaware of the changes, despite an announcement three months ago.
According to Bloomberg, the notes being delisted include the iPath S&P GSCI Crude Oil Total Return Index ETN (OIL) and the iPath MSCI India Index ETN. Barclays is reportedly replacing 15 commodity notes that lack an option for the issuer to call the securities with ones that incorporate this provision. The new ETNs will also carry lower fees than the retiring products.
To smooth the way, Barclays has reportedly reissued statements announcing the 32 delistings and 18 redemptions. The bank is also asking the corporate actions desks of wirehouses and brokerages to pass the information to their clients. Additionally, it has set up a hotline for investors who want to discuss their options.
Investors can currently sell their notes on the exchange or redeem them with Barclays at the market rate. Those who remain in the delisted securities after Thursday have three options: hold them until maturity, trade them over-the-counter or redeem them directly with Barclays for cash or new securities at their prevailing value, which could fluctuate as delisting looms.
Risks of Exchange Traded Notes
An exchange-traded note (ETN) is a senior, unsecured, unsubordinated debt security issued by an underwriting bank. Similar to other debt securities, ETNs have a maturity date and are backed only by the credit of the issuer. ETNs are designed to provide investors access to the returns of various market benchmarks.
ETNs may not be suitable for investors who plan to hold them for a period other than one day, according to their website. They are riskier than securities that have intermediate- or long-term investment objectives.
If your financial advisor over-concentrated your portfolio in Barclays ETNs, you may have a viable claim to recover your losses. Financial advisors are required to make suitable investment recommendations, accounting for your age, income, net worth, investment experience, and investment objectives. Diversification is the key to reducing risk. As such, over-concentrated exposure to any sector or investment, can be unsuitable for many investors.
The White Law Group is investigating the liability that brokerage firms may have for unsuitably recommending high risk ETNs to investors.
If you lost money investing in a Barclays ETN and would like to discuss your litigation options, please call the securities arbitration 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.
For more information on The White Law Group, please visit www.whitesecuritieslaw.com.