The securities and investment fraud law firm Fitapelli Kurta is interested in hearing from investors who have complaints regarding UBS Exchange Traded Access Securities (ETRACS) exchange-traded notes (ETNs) and Alerian MLP Index ETNs. Both of these funds are indexes of oil and gas energy partnerships.
UBS has marketed its ETRACS and Alerian MLP Index ETNs to clients as capable of providing 2x the underlying indices, but its customers may not have fully understood the risks associated with the investments.
UBS ETRACS ETNs are able to generate amplified returns by using embedded derivatives to track securities, indices, commodities, or currencies that are often volatile. They have no principal protections, and may come with significant fees and commissions. Certain UBS ETRACS ETNs are leveraged as much as 200%, meaning that if the underlying index returns 1% on a given day, the ETRACS ETN will theoretically return 2%. The disadvantage of this is that just as these indices amplify gains, they can also amplify losses. It has been alleged that UBS has failed to properly explain the risks to investors.
In January 2016, according to ETF Trends, UBS announced that it was closing the ETRACS 2x Monthly Leveraged Long Alerian MLP Infrastructure Index ETN (NYSE Arca: MLPL) and the ETRACS 2x Monthly Leveraged S&P MLP Index (NYSE Arca: MLPV) funds after they both suffered significant losses.
According to a statement by UBS, the MLPV fund “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 indicative value of the Securities being equal to or less than $5.00 on January 20, 2016.”
ETRACS ETNs track sectors that may generally be inaccessible to UBS investors, and several have already led to losses for UBS clients. Commodity baskets, energy pipelines, and oil prices are a few such investments.
UBS underwrites and manages billions of dollars’ worth of ETRACS market-linked notes, including:
- UBS ETRACS Alerian MLP Index ETN (NYSE Arca: AMU)
- UBS ETRACS 2X Monthly Leveraged S&P MLP Index ETN (NYSE Arca: MLPV)
- UBS ETRACS Alerian MLP Infrastructure Index ETN (NYSE Arca: MLPI)
- UBS ETRACS 2X Monthly Leveraged Long Alerian MLP Infrastructure Index ETN (NYSE Arca: MLPL)
- UBS ETRACS CMCI Energy Total Return ETN (NYSE Arca: UBN)
- UBS ETRACS CMCI Total Return ETN (NYSE Arca: UCI)
- UBS ETRACS Bloomberg Commodity Index Total Return (NYSE Arca: DJCI)
If you have lost money investing in UBS ETRACS ETNs or Alerian MLP Index ETNs, you may be able to collect a recovery. Call the securities and investment fraud law firm Fitapelli Kurta at 877-238-4175 for a free consultation. All cases are taken on a contingency basis: we only receive payment if and when you recover money. You may have a limited window to file your claim, so we suggest you avoid delay. Call 877-238-4175 now to speak to an attorney for free.