We know how devastating it feels when structured products cause major investment losses. We understand this pain because many investors across the country have been misled into purchasing risky structured products that seemed safe but turned into financial disasters.
Our guide will show you exactly how a Structured Products Loss Lawyer can help you recover your lost money and protect your investor rights. You deserve to know your options for getting compensation.
The sting of watching your investment disappear never really goes away. We see this heartbreak every day when investors discover their “safe” structured products have crumbled. These complex investments often get sold as low-risk options, but too many people learn the hard way that wasn’t true.
When brokers don’t explain the real risks or push products that don’t fit your needs, you shouldn’t have to bear the cost alone. A Structured Products Loss Lawyer knows how to fight back against these unfair practices.
They can help you understand what went wrong and work to get your money back. You have rights as an investor, and there are people ready to help you use them.
Key Takeaways
Table of Contents
- Structured products often cause devastating losses when brokers misrepresent risks or recommend unsuitable investments to unsuspecting investors.
- Autocallable notes tied to Silicon Valley Bank became worthless on March 9, 2023, showing how quickly these investments fail.
- Specialized attorneys recover billions through FINRA arbitration, typically resolving cases in 16 months with contingency fee arrangements.
- Investors must gather all documents immediately and consult securities lawyers to preserve evidence and strengthen legal claims.
- Legal options include FINRA arbitration and court lawsuits targeting misrepresentation, fraud, and breach of fiduciary duty claims.
What Are Structured Products Losses?
Structured products losses occur when these prepackaged investments fail to deliver expected returns or cause investors to lose their principal. These financial products tie returns to underlying asset performance through complex triggers and payout rules.
Losses typically result from poor performance of underlying assets, misrepresentation by advisors, or lack of understanding about product risk. Investors face significant challenges because structured products are not easily tradable, and early cash-outs often require selling at substantial discounts.
Real-world examples show devastating results for investors. An autocallable note issued by Citigroup on March 9, 2023, tied to Silicon Valley Bank became nearly worthless when SVB collapsed the same day.
Some 2021 autocallable notes linked to Lucid Motors and tech companies paid minimal returns after early calls or stopped coupon payments entirely, returning less than 10% of original investments at maturity.
Investor losses in structured products can reach seven figures, as documented in broker fraud lawsuits. Understanding the common risks that lead to these investment disasters helps protect your portfolio.
Common Risks Leading to Investment Losses
We often see investors lose money when brokers misrepresent structured products or recommend unsuitable investments. These risky investments come with hidden fees and complex features that many investors don’t fully understand before they buy them.
Misrepresentation and unsuitable recommendations
Financial advisors often mislead clients about structured products through misrepresentation and unsuitable recommendations. Brokers frequently describe these complex investments as safe, conservative, or income-generating products.
In reality, structured products carry high risks that many investors don’t understand. Advisors fail to conduct proper due diligence before making recommendations. They ignore clients’ risk tolerance, financial goals, and personal circumstances.
This negligence leads to significant investment losses for unsuspecting investors.
Stifel broker Chuck Roberts exemplifies this problem with at least 23 customer disputes in his CRD record. Most disputes were filed in the last two years, with total pending loss recovery claims exceeding $30 million.
A Florida couple won at least $9 million in punitive damages against Roberts for unsuitable recommendations. Legal claims against advisors typically cite breach of fiduciary duty, fraud, and failure to supervise.
Customer disputes reveal patterns of concentrated holdings and inadequate risk disclosure. Advisors must recommend only suitable investments based on each client’s specific situation, but many ignore this fundamental obligation.
Hidden fees and high-risk features
Hidden fees and high-risk features create major problems for investors in structured products. We see advisors earning 3% to 4% commissions on these financial instruments, which creates a clear commission conflict.
These high payouts give brokers strong incentives to prioritize sales over client interests. Structured products carry hidden costs that reduce returns significantly. Issuers rarely explain these fees properly to investors, creating serious transparency issues.
Complex payout formulas and derivative structures make it nearly impossible to understand the true investment risk. Early cash-outs require selling at steep discounts because these products lack liquidity risk protection.
Major issuers like Morgan Stanley, Citigroup, JP Morgan, Goldman Sachs, and UBS have created tens of billions in structured products with strict redemption terms. Issuer bankruptcy poses additional threats since many structured products are unsecured debt.
Principal protection often proves illusory when investors face potential principal loss, default risk, and marketing compliance failures that hide the real dangers of these derivative instruments.
Types of Problematic Structured Products
We encounter various types of structured products that can cause significant financial losses for investors. These complex investment vehicles often hide their true risks behind confusing terms and misleading marketing materials.
Autocallable notes
Autocallable notes rank among the most problematic structured products we see today. These financial instruments promise periodic coupon payments if the underlying asset stays above a specific barrier level.
Major financial institutions like Morgan Stanley, Citigroup, JP Morgan, Goldman Sachs, and UBS have issued tens of billions in these notes to investors seeking steady income. Banks often market these products as safe investments with principal protection, but the reality tells a different story.
Market conditions can quickly destroy the value of autocallable notes, leaving investors with devastating losses. If the underlying asset drops below the knock-in level, investors may only recover the diminished value of the worst-performing asset.
A perfect example occurred on March 9, 2023, when Citigroup issued an autocallable note tied to Silicon Valley Bank. The note became nearly worthless the same day due to the bank’s collapse.
Some 2021 autocallable notes linked to Lucid Motors and tech companies offered minimal investment returns or stopped coupon payments entirely. Investors who expected steady income often receive less than 10% of their original investment at maturity when conditions are not met.
Early redemption clauses allow issuers to call these notes when market conditions favor them, stopping future coupon payments and limiting investor returns. Steepener notes present another category of risky structured products that can cause significant losses.
Steepener notes
Steepener notes are complex structured products that work like an interest rate swap. These investments link their performance to the yield curve, specifically the difference between short-term and long-term interest rates.
Brokers often present these notes with attractive initial coupon rates that catch investors’ attention. However, these high teaser rates can drop sharply if the yield curve flattens.
This sudden change creates unexpected capital loss for many investors who didn’t understand the risks.
These structured products typically carry 20-year maturities, making them extremely illiquid investments. Brokers frequently misrepresent steepener notes as suitable for conservative investors and retirees, despite their high-risk nature.
Market volatility can drastically affect payouts, leading to reduced interest payments when conditions change. The complexity of these longterm investments makes them unsuitable for most retail investors.
Financial misrepresentation occurs when brokers fail to explain how yield curve movements impact returns. Investor risk increases significantly because early exit options remain limited and potentially costly.
Understanding autocallable notes requires similar attention to detail and risk assessment.
Market-linked notes
Another complex structured product that creates significant investment risk involves market-linked notes. These securities provide returns based on the performance of underlying assets such as market indices, securities, currencies, or commodities.
Banks and financial institutions issue these notes, but they are often not FDIC insured. Poor performance of the underlying asset can result in principal loss for investors.
Market-linked notes can have maturities ranging from 6 months to 12 years and may offer full, partial, or no capital protection. FINRA requires that investors must be approved for options trading and undergo suitability checks before purchasing these products.
Brokerages must conduct due diligence and ensure recommendations align with clients’ best interests. These structured products are often unsuitable for low-risk investors or those needing liquidity.
High risk exists if sold before maturity, even though they can offer diversification and possible principal protection when held to maturity. Legal claims for losses may be pursued through FINRA arbitration when brokers fail to meet their obligations.
How a Structured Products Loss Lawyer Can Help
When structured products cause investment losses, we need specialized legal help to fight back against financial firms that may have misled us or sold unsuitable products.
Evaluating your case for mismanagement or fraud
We investigate claims of misrepresentation, nondisclosure, or securities law breaches related to structured products. Our attorneys examine whether broker-dealers failed to supervise representatives or conduct proper due diligence before recommending these investments.
Legal issues often involve failure to disclose risks, unsuitable investment recommendations, or concentration in risky products.
Claims may involve negligence, gross negligence, fraud, breach of fiduciary duty, or failure to supervise. Securities and investment fraud attorneys help organize evidence and assess whether clients’ losses resulted from mismanagement or fraudulent practices.
Haselkorn & Thibaut has decades of experience and a history of recovering billions for clients through careful case evaluation and client advocacy. Next, let’s explore how legal representation works in FINRA arbitration proceedings.
Representing you in FINRA arbitration
We represent investors in FINRA arbitration proceedings against brokerages and financial institutions. FINRA arbitration involves 1 to 3 arbitrators who make binding decisions about your claims.
This process typically resolves cases in about 16 months, which is faster than court litigation. Mediation can happen before arbitration begins, and these settlement discussions average about 1 year to complete.
Brokerages employ specialized attorneys to defend against investor claims, making legal representation crucial for your success. Our lawyers have experience on both sides of these disputes, previously defending brokerages before representing investors exclusively.
We review your evidence, file claims properly, and represent clients at hearings while providing ongoing legal advice throughout the process. Brokerages must pay any award or settlement within 30 days, or they risk license suspension or cancellation by regulators.
Legal Options for Recovering Your Losses
Investors suffering losses due to structured products have several legal options for recovering their investments. We can file claims through FINRA arbitration or pursue a lawsuit in court to address securities fraud and financial misconduct.
These legal claims often focus on misrepresentation, unsuitability, lack of disclosure, or conflicts of interest by financial advisors and institutions. Regulatory measures now require issuers to disclose the estimated fair market value of structured products at the issue date, which provides strong grounds for legal action when this information gets misrepresented.
Securities fraud lawyers can investigate misleading sales practices and hold banks and brokerage firms accountable for their actions. Haselkorn & Thibaut offers nationwide representation for investors, often working on a contingency fee basis so clients pay nothing unless they recover money.
This leading investment fraud law firm holds a top 2% peer review ranking and Super 100 lawyers rating. Spanish language support is available for investors who need it. Taking the right steps after experiencing losses becomes crucial for building a strong case.
Steps to Take After Experiencing Losses
When you discover structured products losses in your investment portfolio, we recommend taking immediate action to protect your rights. Acting quickly helps preserve crucial evidence and strengthens your position for potential financial recovery through legal recourse.
Gather investment documents and evidence
We must collect and preserve all investment documents immediately after experiencing structured products losses. Documentation includes offering materials, account statements, and risk disclosures that brokers provided during the sales process.
Investment records help attorneys evaluate potential misconduct and build strong legal claims. Compile evidence of inadequate risk disclosures, unsuitable investment recommendations, and misleading information from financial advisors.
Maintain records of all transactions and correspondence with your broker or investment firm.
Evidence of misrepresentation or omission becomes critical in holding brokers accountable for losses. Organize investment records systematically to support recovery efforts through legal channels.
Document all communications with brokers related to structured products, including emails, phone call notes, and meeting summaries. Legal assistance proves vital in preparing and submitting evidence for claims against financial advisors who engaged in misconduct.
Consult a specialized attorney
After collecting all your investment documents and evidence, your next crucial step involves seeking professional legal representation. Specialized attorneys understand the complex world of securities litigation and can evaluate whether your brokerage firms met their due diligence obligations.
These legal experts know how to navigate the claims process through FINRA arbitration or court proceedings.
Securities attorneys operate on a contingency fee basis, which means they only charge clients when they achieve successful recovery options. Haselkorn & Thibaut offers nationwide practice with their “No Recovery, No Fee” policy, making legal help accessible to investors facing financial losses.
Professional legal counsel can determine if your case involves mismanagement or fraud while protecting your investor rights throughout the arbitration process.
Conclusion
We understand how devastating structured product losses can feel for investors who trusted their financial advisors. Legal recourse exists when brokers misrepresent these complex investments or fail to explain their true risks.
Specialized attorneys help recover your financial losses through FINRA arbitration and other legal options. Don’t let investment fraud go unchallenged when professional legal representation can fight for the compensation you deserve.
Taking action protects both your financial future and holds negligent advisors accountable for their misconduct.
