Structured products are complex, bank-issued investments that combine a bond with a derivative. Your broker may have described them as a way to capture market upside with built-in protection. The reality is often less generous: the protection is conditional, the upside is capped, and the fees are embedded in the price you pay.
If you lost money after your advisor failed to explain the limits or recommended more than you could tolerate, contact us. Haselkorn & Thibaut, P.A., operating as Investment Fraud Lawyers, can review your claim at no charge. Call 1-888-885-7162 for a free case review.
Our firm represents investors nationwide in Financial Industry Regulatory Authority (FINRA) arbitration against broker-dealers and financial advisors. We are former Wall Street defense attorneys with more than 95 years of combined experience. We work on a contingency fee basis, so you owe no attorney fee unless we recover money for you.
What a structured product actually is
A structured product is typically a debt obligation issued by a bank or broker-dealer. Its return is tied to one or more reference assets. Examples include the S&P 500, a basket of stocks, interest rates, or commodities.
The product is “structured” because the issuer combines a zero-coupon bond or similar component with options or swaps. This creates a specific payoff profile. Common forms include structured notes, equity-linked notes, reverse convertibles, auto-callable notes, buffered notes, and worst-of structures.
Each design carries its own trigger points. If the reference asset moves in a certain way, your return may be zero. Your principal may convert into shares of a poorly performing stock.
The product term sheet governs every outcome, yet many investors never receive a plain-language explanation of those terms.
How structured product fraud and misconduct occur
A structured product is not automatically fraudulent. A claim arises when the product was misrepresented, unsuitable, or improperly concentrated in your portfolio. Common misconduct includes overstating safety, hiding the cap on gains, omitting the call or conversion features, and failing to disclose the issuer’s credit risk.
FINRA Rule 2111 requires brokers to recommend only investments that fit the customer’s profile. That includes age, risk tolerance, investment objectives, liquidity needs, and net worth. A broker who ignores these factors when selling a complex derivative-backed note may violate the suitability rule. The firm may also be liable for failure to supervise if it allowed the sale to proceed without review.
Another problem is overconcentration. A retiree who needs stable income should not hold a large portion of assets in leveraged or worst-of structured products. That mismatch can support an unsuitable investments claim or a overconcentration claim in arbitration.
Warning signs that your broker misrepresented the product
| Warning sign | What it means | Why it matters |
|---|---|---|
| Called it “principal protected” without conditions | The protection usually has limits, buffers, or issuer-credit conditions. | You may face losses the broker never explained. |
| Promised stock-like returns with bond-like safety | The upside is typically capped; the downside may be uncapped. | The pitch creates a false sense of security. |
| Did not explain call features or auto-call dates | The issuer may redeem the note early, ending your expected return. | You can lose the income or upside you were counting on. |
| Hid the participation rate or buffer | You may receive only a fraction of the index gain while bearing full downside. | The product can lag a simple index fund. |
| Concentrated your account in one issuer’s notes | Credit risk and liquidity risk are concentrated too. | A default or market event can devastate the portfolio. |
What you may recover through FINRA arbitration
If your structured product claim succeeds in FINRA arbitration, the panel may award compensation for your net investment losses. The panel may also award interest, excess embedded fees, and damages caused by misrepresentation. In some cases, attorneys’ fees may be included. The amount depends on the facts of your case, the strength of the evidence, and the panel’s judgment.
Most customer disputes with brokerage firms must be filed through FINRA arbitration rather than court. Brokerage agreements usually contain a pre-dispute arbitration clause. FINRA arbitration claims must generally be filed within six years of the events giving rise to the dispute.
For structured products, that usually means six years from the date of purchase. Missing the deadline can bar your claim, so early review is important.
Steps to take if you suspect structured product fraud
| Step | Action | Purpose |
|---|---|---|
| 1. Gather documents | Collect account statements, trade confirmations, term sheets, and marketing materials. | These show what you were told and what you actually bought. |
| 2. Review the term sheet | Look for the participation rate, cap, buffer, call schedule, and conversion terms. | The term sheet controls your rights and payoff. |
| 3. Document the pitch | Write down what your advisor said about safety, returns, liquidity, and fees. | Misrepresentation claims often turn on what was promised. |
| 4. Compare to your profile | Check whether the product matched your stated risk tolerance and investment goals. | A mismatch can support a suitability claim. |
| 5. Contact a securities lawyer | Ask for a free review before the arbitration deadline passes. | An attorney can preserve evidence and file on time. |
How our firm investigates structured product claims
We start by reviewing your account records, the product term sheet, and your new-account documentation. We compare the broker’s statements to the actual terms. We then assess whether the recommendation was suitable, whether risks were disclosed, and whether the firm’s supervisory system failed.
Our attorneys have recovered $520 million for investors, and we report a 98% success rate. We handle cases on a contingency fee basis, so there is no attorney fee unless we recover money for you. We represent clients nationwide from offices in Juno Beach, Florida; Phoenix, Arizona; New York, New York; Cary, North Carolina; and Houston, Texas.
Frequently asked questions
What is the difference between a structured note and a structured product?
A structured note is a type of structured product. It is a debt security whose return depends on reference assets such as an index or stock. The broader term “structured product” also includes certificates of deposit, warrants, and other packaged instruments with embedded derivatives.
Can I recover losses if the market itself declined?
Market losses alone do not create a valid claim. You may have a claim if your broker misrepresented the product or recommended an unsuitable investment.
A claim may also arise if the broker failed to disclose material risks or improperly concentrated your account. A lawyer can review the specific facts.
How long do I have to file a FINRA arbitration claim for structured product losses?
FINRA arbitration claims must generally be filed within six years of the events giving rise to the dispute. For most structured product claims, the clock starts on the date of purchase or the date the misconduct occurred. Because deadlines are fact-specific, you should seek legal review promptly.
What damages are available in a structured product fraud case?
An arbitration panel may award net investment losses, interest from the date of loss, excess embedded fees, and damages caused by misrepresentation. Attorneys’ fees may be awarded in some cases. Punitive damages are rare and depend on the jurisdiction and the conduct.
Do structured product cases settle or go to a hearing?
Many FINRA arbitration cases settle through mediation or negotiated resolution. If a settlement cannot be reached, the case proceeds to a final hearing before a panel of arbitrators. The decision is binding and subject to very limited court review.
How do I start a free case review with Investment Fraud Lawyers?
Call 1-888-885-7162 or submit your documents through our intake process. We will review your account records, the product term sheet, and the broker’s statements at no cost. We only charge an attorney fee if we recover money for you.
Structured product losses can be hard to detect until the trigger event occurs. If you believe your advisor misled you or placed you in an investment that did not fit your profile, contact us today. We offer a free case review.
This page is for informational purposes only and does not constitute legal advice. Past results do not guarantee future outcomes.