ETNs Can Be Dangerous Investment

Posted on May 5th, 2014 at 9:00 AM

From the Desk of Jim Eccleston at Eccleston Law Offices:

A 56-year-old civil engineer lost 80 percent of his investment, about $45,000 on the wrong end of a particular ETN known as TVIX when it crashed a week after he bought it.

The TVIX, issued by Credit Suisse, is an exchange traded note that is a senior, unsecured, unsubordinated debt security designed to provide investors access to the returns of various market benchmarks.

TVIX offering document, says on the first page that the security is intended for “sophisticated investors.” The value of the note “is likely to be close to zero after 20 years and we do not intend or expect any investor to hold the ETNs from inception to maturity,” according to the prospectus of TVIX.

The SEC also is asking banks to make revisions to their ETN prospectuses. Some ETNs, particularly those with the word “shares” in the title, may be ambiguous enough for investors to think they’re buying stocks or exchange-traded funds.

The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston


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