Key Takeaway: Structured products are complex, bank-issued investments that combine bonds with derivatives — often marketed as offering “market participation with protection” when the protection is conditional, the upside is capped, and the fees are invisible — and investors who were misled may have FINRA arbitration claims.

Structured Product Fraud Attorney — Recover Losses From Mis-Sold Notes

Your broker told you about an investment that offered the upside of the stock market with protection against losses. “Principal-protected.” “Buffered downside.” “Enhanced yield.” It sounded like the best of both worlds — participate in gains but limit your risk.

What your broker probably didn’t explain is that the “protection” is conditional, the upside is capped at levels well below market returns, the embedded fees are invisible and substantial, and if the market drops beyond the protection barrier, you could lose your entire principal — including on products marketed as “principal-protected.”

Structured products are among the most complex and opaque investments available to retail investors. Banks issue approximately $100 billion in structured notes annually in the U.S. market, and a significant portion of these are sold to investors who don’t understand what they’re buying.

Haselkorn & Thibaut has over 50 years of experience recovering losses from structured product fraud. Our 98% success rate reflects our ability to cut through the complexity and prove when these products were mis-sold.

Call 1-888-885-7162 for a free consultation, or contact us online to speak with a structured product fraud attorney.

What Is Structured Product Fraud?

Structured product fraud occurs when a broker or financial advisor misrepresents, omits material facts about, or recommends an unsuitable structured product — typically a structured note — to an investor. The fraud usually involves overstating the safety of the investment, understating the risks, concealing the embedded fees, or recommending a product that is too complex or risky for the investor’s financial profile.

A structured note is a debt instrument issued by a bank that combines a traditional bond component with a derivative component linked to the performance of an underlying asset — such as a stock index, a single stock, a commodity, or a basket of assets. The derivative component determines the note’s return, which can vary significantly based on the specific terms.

The appeal is obvious: your broker tells you that you can participate in market gains while being protected from losses. But as with most things that sound too good to be true, the details tell a very different story.

Structured product fraud is not about the product being inherently illegal — it’s about the way the product is sold. When a broker recommends a structured product without fully disclosing its conditional protection, capped upside, embedded fees, and counterparty risk, that conduct may violate FINRA rules.

For a comprehensive guide on structured note risks, see: Structured Notes Explained: The Hidden Risks Your Broker Didn’t Mention →

Signs You May Be a Victim of Structured Product Fraud

You were told the investment was “principal-protected” — Many structured notes are marketed as offering principal protection, but the protection is conditional. If the underlying asset drops below a certain threshold (the “barrier”), you may lose some or all of your principal. If your broker described the product as “safe” or “guaranteed” without explaining the conditions, you were misled.
Your returns were capped well below market performance — You participated in the market’s gains, but only up to a cap. When the S&P 500 rose 25%, your structured note returned 8% because of a cap the broker didn’t adequately explain. The cap structure means you bear most of the downside risk while capturing only a fraction of the upside.
You didn’t understand the payoff structure — Structured products use complex payoff formulas that are difficult even for experienced investors to evaluate. If your broker couldn’t explain the payoff structure in plain language, they likely didn’t understand it themselves — and they shouldn’t have recommended it.
The note was called early, returning less than expected — Many structured notes include a “call feature” that allows the issuing bank to redeem the note before maturity. When a note is called early, your investment is returned at par — ending your participation in any further gains. This benefits the bank, not you.
You lost money despite the market going up — Some structured products have payoff structures so complex that investors lose money even when the underlying asset performs well. This happens with “inverse” structures, “range-bound” notes, and products with participation rates below 100%.
You weren’t told about the issuing bank’s credit risk — Structured notes are unsecured debt obligations of the issuing bank. If the bank fails — as several did during the 2008 financial crisis — you could lose your entire investment regardless of the underlying asset’s performance. Your broker probably didn’t mention this.

Call 1-888-885-7162 for a free consultation, or contact us online — we can analyze your structured product and determine whether you have a claim.

How We Build Your Structured Product Fraud Case

Product analysis — We deconstruct the specific structured product you were sold, including its payoff formula, protection barriers, cap rates, participation rates, call features, and maturity terms. We compare what the product actually delivers against what your broker represented.
Suitability assessment — We evaluate whether the structured product was appropriate for your financial profile. If you needed liquidity, had a conservative risk tolerance, or lacked the sophistication to evaluate a structured product, the recommendation may have been unsuitable.
Disclosure failures — We document what your broker told you and what they failed to disclose. Key omissions in structured product sales include: conditional nature of protection, cap rates, embedded fees, call features, counterparty risk, and the complexity of the payoff structure.
Pricing and fee analysis — Structured products embed the issuing bank’s profit margin and the broker’s commission in the product’s initial price. These fees are invisible to investors but can amount to 2–5% or more of the investment. We work with financial experts to quantify these hidden costs.
Damages calculation — We calculate your total losses, including the difference between your actual returns and what you would have earned in a suitable investment, the impact of embedded fees, and any principal losses from breached protection barriers.

Common Types of Structured Products Involved in Fraud Claims

Principal-Protected Notes

Marketed as “100% principal protection,” these notes guarantee return of your principal at maturity — but only if you hold to maturity and only if the issuing bank doesn’t fail. Early redemption may result in significant losses, and the “protection” provides no benefit if you need your money before maturity.

Buffered or Buffered Down Notes

These notes offer a “buffer” — for example, protection against the first 10–20% of market decline. But if the market falls beyond the buffer, you participate in the full downside. Your broker may have emphasized the buffer while minimizing the risk of losses beyond the buffer level.

Reverse Convertible Notes

These are among the most dangerous structured products for retail investors. They offer a high coupon rate but expose you to the full downside of a reference stock — meaning you could lose most of your principal if the stock drops significantly. Brokers often sell these by emphasizing the coupon while downplaying the risk.

Auto-Callable Notes

These notes are called (redeemed) by the issuer when the underlying asset reaches a certain level. The call feature benefits the bank by capping your gains, while you bear the full downside risk. The asymmetry is built into the product.

Range Accrual Notes

These notes pay interest only when the underlying asset stays within a specified range. If the asset moves outside the range — which is more likely in volatile markets — your returns drop to zero or near-zero.

What You Can Recover

Through FINRA arbitration, victims of structured product fraud may recover:

Net investment losses — The difference between what you lost and what you would have earned in a suitable investment
Excess embedded fees — The hidden fees and profit margins built into the product’s initial price
Damages from misrepresentation — If your broker made false statements about the product’s safety, returns, or features
Interest — Compensation for the time your money was trapped in an unsuitable product
Attorneys’ fees — May be awarded by the arbitration panel
Punitive damages — In cases involving particularly egregious mis-selling or concealment of material risks

Why Choose Our Firm

Over 50 years of experience recovering losses from structured product fraud
98% success rate across all investment fraud cases
Free consultation — we analyze your structured product at no cost
Contingency fee — you pay nothing unless we recover money for you
Nationwide representation — we handle cases in all 50 states
Former Wall Street defense lawyers — we understand how banks structure and sell these products
Financial expertise — we work with quantitative analysts who can deconstruct complex payoff structures and identify hidden costs

Call 1-888-885-7162 for a free consultation, or contact us online — we can tell you whether your structured product was properly sold.

Related Practice Areas

FAQ

What exactly is a structured product? A structured product (or structured note) is a debt instrument issued by a bank that combines a bond component with a derivative component. The bond component is intended to provide principal protection at maturity, while the derivative component links your returns to the performance of an underlying asset like a stock index. The specific payoff — how much you gain or lose — depends on the product’s terms, which can be extremely complex.

Are all structured products bad investments? No. Structured products can serve legitimate purposes for sophisticated investors who understand the payoff structure, the conditional nature of protection, and the embedded costs. The problem is that these products are frequently sold to retail investors who don’t understand them, with key risks and costs omitted from the sales presentation. The mis-selling — not the product itself — is the basis for a claim.

What does “principal-protected” really mean? “Principal-protected” typically means that if you hold the note to its full maturity date and the issuing bank doesn’t default, you’ll receive your original investment back. The protection is conditional: it doesn’t apply if you sell before maturity, if the bank fails, or if the product’s terms include exceptions. Many “principal-protected” notes actually have conditions where principal can be lost — the name is often misleading.

How do I know if my structured product was unsuitable? Key questions: Did you understand the payoff formula? Did you need liquidity that the product doesn’t provide? Is the product consistent with your risk tolerance and time horizon? Did your broker explain the cap rates, barriers, call features, and counterparty risk? If the answer to any of these is no, the product may have been unsuitable. Our firm can evaluate this at no cost.

How long do I have to file a structured product fraud claim? FINRA arbitration claims must generally be filed within 6 years of the events giving rise to the dispute. For structured products, this typically means six years from the date of purchase. However, if the mis-selling wasn’t discovered until later (for example, when the product matured or was called), the discovery rule may apply. Contact us promptly to protect your rights.

Can I recover losses if my structured product hasn’t matured yet? Yes. You don’t need to wait until maturity to file a claim. If the structured product was unsuitable when it was recommended, you may have a claim regardless of its current status or value. In fact, filing sooner rather than later is generally better because evidence is more available and the statute of limitations is less likely to be an issue.

This page is for informational purposes only and does not constitute legal advice. Past results do not guarantee future outcomes.