SMHD FINRA Lawsuit Investigation


Notice to UBS ETRACS Monthly Pay 2x Leveraged US Small Cap High Dividend ETN (Symbol: SMHD) investors. The Haselkorn & Thibaut, P.A. law firm is a nationwide investment fraud law firm investigating potential sales practice violations by financial advisors who were recommending ETRAC SMHD exchange-traded notes to investors.

The recent trading in SMHD has been in the $3.00/share range and is now being “mandatory redeemed by UBS.” Looking back, over the second half of 2016, SMHD was generally trading at or above $16.00/share, and that trend continued through 2018 (with some price volatility). In 2019, it was usually trading around $10.00/share to $15.00/share, and that trend continued through 2019 and even into early March 2020. The year-to-date total return is down over -75%.

SMHD tries to return a monthly compounded 2x leveraged long exposure to the performance of the index, reduced by the accrued fees. The SMHD fund is a series of Monthly Pay 2xLeveraged Exchange Traded Access Securities (ETRACS) linked to the performance of the price return version of the Solactive US Small Cap High Dividend Index.

The small-cap dividend index is designed to measure the performance of 100 relatively small capitalization, dividend-yielding index constituent Securities selected from a universe of qualifying U.S. listed stocks.

ETRACS SMHD Lawsuit Investigation

The Haselkorn & Thibaut, P.A. law firm is a nationwide investment fraud law firm investigating potential sales practice violations by financial advisors who were recommending SMHD and many similar ETRAC exchange-traded notes sold to investors.

For investors, this is a particularly tough blow as these are the types of investments that were often recommended by financial advisors to clients who were looking for income in their portfolios (often retirees or similarly conservative investors). This was likely a recommendation that was expected to be low volatility and fairly conservative, now investors are faced with substantial losses as a result of a level of risk to their original investment principal that was probably never correctly disclosed (if it was ever disclosed at all) by their financial advisors.

As some strategies are leveraged in the hopes of increasing potential returns, they also increased the level of risk, and some investors may not have been advised of those potential risks as well.  Although Financial advisors may claim that these were unforeseen market events, the reality is that these are similar risks to those experienced in the 2008-2009 financial crisis. These potential risks were material risks that should have been properly disclosed to clients before recommending these investments individually or as part of a portfolio or investment strategy.

Many of these investments were sold by UBS Financial advisors and other financial advisors without proper risk disclosures, as these are considered very risky and complex (some even speculative because of the leverage) securities. In cases where these were recommended to retirees or similar conservative income-seeking investors there is the potential for sales practice abuse as a result of misrepresentations, but more often as a result of omissions of material fact, or due to a lack of proper supervision.

Investors Seeking to Recover Losses SMHD

For some investors, a private FINRA arbitration customer dispute enables them to bring a claim and potentially recoup their investment losses of SMHD. These customer disputes typically involve only paper discovery and no depositions, and they are generally faster and more efficient compared to traditional court litigation, as they provide a private forum to resolve disputes more quickly and efficiently.  Read more on how to sue a financial advisor.

About Haselkorn & Thibaut, P.A.

Haselkorn and Thibaut specializes nationwide the handling investment fraud arbitration cases. The law firm has offices in Florida, New York, Arizona, North Carolina. The two founding partners have nearly 45 years of legal experience.

Haselkorn & Thibaut, P.A. has filed numerous (private arbitration) customer disputes with the Financial Industry Regulatory Association (FINRA) for customers who suffered investment losses relating to issues similar to those matters mentioned above. There are typically no depositions involved, and those cases are typically handled on contingency with no recovery, no fee terms. Experienced attorneys at Haselkorn & Thibaut, P.A., are available for a free consultation as a public service. Call today for more information at 1-800-856-3352.

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