UBS ETRACS Exchange Traded Notes (ETNs) Lawsuit Investigation

UBS ETRACS mandatory repemption and trading freeze; Some investors reportedly lose over 60% of their original investment

Gibbs Law Group is investigating UBS Financial Services advisors for allegedly selling ETRACS exchange traded notes (ETNs) to customers without fulling disclosing the risks. These ETRACS place leveraged bets on market sectors, which can be extremely risky in a volatile market. When the market crashed in March of 2020, UBS instituted mandatory redemption for certain ETRACS ETNs and froze trading of other ETNs, causing investors to lose thousands.

If you invested in UBS ETNs, and lost money due to the recent market crash, you may have a claim. Speak with a securities lawyer to learn more about your options.

Lost Money in UBS ETRACS ETNs?

You may have a claim. Get a free and confidential consultation.


UBS ETRACS News: Mandatory Redemption in Market Crash

In March of 2020, the global market crash resulted in mandatory redemption of UBS ETRACS, causing investors to lose about 60% or more of their original investment. Many of the ETNs are invested in risky market sectors and employ leverage, which may not have been suitable for risk adverse investors. UBS ETRACS (or “Market-Linked Notes”) include:

  • HDLV: ETRACS Monthly Pay 2xLeveraged U.S. High Dividend Low Volatility ETN
  • SMHD: ETRACS Monthly Pay 2xLeveraged US Small Cap High Dividend ETN
  • DVHL: ETRACS Monthly Pay 2xLeveraged Diversified High Income ETN
  • CEFL: ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN
  • CEFZ: ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN
  • BDCL: ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index ETN
  • LBDC: ETRACS 2xLeveraged Long Wells Fargo Business Development Company ETN
  • MORL: ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN
  • MRRL: ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN
  • LRET: ETRACS Monthly Pay 2xLeveraged MSCI US REIT INDEX ETN
  • MLPQ: ETRACS 2x Monthly Leveraged Alerian MLP Infrastructure Index ETN
  • HOML: ETRACS Monthly Reset 2xLeveraged ISE Exclusively Homebuilders ETN
  • MLPZ: ETRACS 2xMonthly Leveraged S&P MLP Index ETN Series B
  • LMLP: ETRACS Monthly Pay 2xLeveraged Wells Fargo MLP Ex-Energy ETN
  • WTID: ETRACS ProShares Daily 3x Inverse Crude ETN linked to the Bloomberg WTI Crude Oil Subindex

Our firm is investigating legal claims on behalf of anyone who has a UBS brokerage account and suffered losses in these ETRACS ETNs. Get a free and confidential consultation today.

The Risks of UBS ETRACS Exchange Traded Notes

What are ETNs?

Exchange Traded Notes (ETNs) allow investors to place bets on the performance of market indexes. Instead of owning a security or piece of the index, ETN investors purchase a bond that is tied to a financial instrument within the market. ETNs often then pay a distribution depending on the performance of the index at the ETNs maturity date.

The Securities and Exchange Commission (SEC) has issued several warnings about ETN trading for amateur investors. These warning include risks tied to overall credit, the market, liquidity, and price. The SEC even warns that some ETNs may be subject to early redemption. Since the returns on ETNs are largely based on the performance of the ETN at the price of maturity, early redemption may result in significant losses for the investor if sold when the index is performing poorly.

Why are UBS ETNs particularly risky?

Each ETN is tied to a specific market sector or index. The more volatile the sector, the riskier the ETN. Many of these UBS ETRACS ETNs track extremely volatile market sectors including oil prices, energy pipelines, and commodity baskets. This places investors at extreme risk if any of these sectors tank within the market.

Further, UBS ETNs are reportedly associated with high fees and commissions. These high commissions could have potentially incentivized advisors and entities to sell ETRACS to investors who are not suitable for ETN investments. ETN investments can be particularly unsuitable for people who are risk-adverse, close to retirement, looking for fixed income returns, and those hoping to preserve their principle.

UBS financial advisors had a duty to properly disclose the risks associated with ETRACS ETN investments. If you believe the UBS ETRACS investment was not right for you, or you were promised steady income or high return that were not delivered, you may have a claim. Speak with a lawyer to learn more about legal recourse.

What can UBS ETRACS Investors Do?

Our firm is investigating whether UBS advisors properly disclosed the risks associated with ETNs when selling ETRACS to investors. If you feel as though you were misguided or not properly informed of the risks involved with ETRACS ETNs, you may have a claim.

Investors who lost money in their UBS ENTRACS may qualify for monetary recovery. Speak with a lawyer and get a free case evaluation today.

UBS ETRACS BDCL Losses Investigation

While many of the UBS ETRACS performed poorly, some resulted in larger losses than others. The UBS ETRACS ETN, BDCL, reportedly resulted in large losses for investors.

BDCL, also known as UBS ETRACS Monthly Pay 2X Leveraged Long Wells Fargo Business Development Company Index ETN, had been performing well for the majority of the past few years. Aside from a few periods of volatility, BDCL has generally been trading between $15 per share and $20 per share from the second half of 2016 to early 2020. By late March of 2020, however, shares of BDCL were trading as low as $3 per share.

Investors in ETRACS Monthly Pay 2X Leveraged Long Wells Fargo Business Development Company Index ETN (BDCL) may have a claim against the brokerage firm that sold them this investment. Contact our law firm to learn if you are eligible for BDCL monetary recovery.

UBS Financial Services Lawsuits

In addition to our investigation regarding the UBS ETRACS ETNs, there have reportedly been several other lawsuits filed on behalf of investors who lost money in UBS YES (UBS Yield Enhancement Strategy). Many of these lawsuits allege that UBS advisors placed conservative investors into the Yield Enhancement Strategy with the understanding that it would improve the returns on their portfolio. However, some investors have reportedly claimed that UBS did not adequately disclosed the risks associated with the YES program.

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