Credit Suisse DGAZ Exchange-Traded Notes Investigation
As with prior downturns, the 2020 economic downturn sparked by the Coronavirus revealed a significant amount of broker misconduct and investment fraud. Despite brokerage firms and financial professionals having a duty to verify the investments they recommend to their customers, many recommended Exchange-Traded Notes (ETNs) without fully disclosing the risks. Now, many investors have lost much or all their savings.
If you lost money because you have Credit Suisse DGAZ ETNs in your account, it is important to know that you have rights. The securities lawyers at Peiffer Wolf Carr Kane & Conway will fight to recover your losses. Peiffer Wolf is currently representing investors who have suffered significant losses due to unsuitable investment advice, investors with overconcentrated investment portfolios, and investors with portfolios that don’t match their risk profiles. If you are an investor who has suffered losses due to ETNs, contact us today for a FREE portfolio evaluation.
Credit Suisse Investigation: VelocityShares Daily 3x Inverse Natural Gas ETN (DGAZ/DGAZF)
DGAZF, originally DGAZ before recently delisting, is an ETN that gains investors exposure in Natural Gas 3 times its inverse (3x the Inverse of the S&P GSCI Natural Gas Index ER). Credit Suisse delisted DGAZ in June, leaving it unmanaged instead of closing the note outright. DGAZ was one of several ETNs delisted by Credit Suisse this year.
Exchange-Traded Notes (ETNs) spark controversy because, as The Wall Street Journal has pointed out, “[b]anks and brokerage firms advertised them as offering payouts both steadier and more lucrative than plain-vanilla investments such as bonds or index-tracking funds. Most professional money managers avoided them.” The reason why they were avoided? “There is no such thing as an investment that is both safe and highly profitable.”
In addition to that, according to BloombergQuint, “Most of the ETNs being delisted are leveraged, which means they use derivatives to amplify returns of the securities they track. Those products have come under scrutiny in recent months as the coronavirus roiled markets. Credit Suisse’s move followed similar decisions by UBS Group AG and Citigroup Inc. to liquidate several of their leveraged commodity ETNs.”
DGAZ is a great example of how ETNs can be extremely volatile: within a week, DGAZF went from trading at $400 to $24,000 and back down to $13,000. As a result, investors have experienced huge losses due to DGAZF.
This isn’t the first time VelocityShares ETNs backed by Credit Suisse have delisted unexpectedly. In 2016, Credit Suisse delisted the VelocityShares 3x Long Crude Oil ETN (UWTI)and the VelocityShares 3x Inverse Crude Oil ETN (DWTI), which had $1.6 billion and $222 million in assets under management, respectively, at the time.
(Heather Bell, ETF.com)
If you lost money because you have DGAZ in your account, it is important to know that you have rights. The securities lawyers at Peiffer Wolf will fight to recover your losses. Peiffer Wolf is currently representing investors who have suffered significant losses due to unsuitable investment advice, investors with overconcentrated investment portfolios, and investors with portfolios that don’t match their risk profiles. If you are an investor who has suffered losses, contact us today for a FREE portfolio evaluation.
What are ETNs?
Exchange-traded notes, knows also as ETNs, “are unsecured debt obligations of financial institutions.” They “generally do not pay interest to their holders. Payments on ETNs may be linked to well-known broad-based securities indexes or based on indexes tied to emerging markets, commodities, volatility, a specific industry sector (e.g. oil and gas pipelines), foreign currencies, or other assets.”
Also according to the SEC, “Many ETNs are issued with maturities of 20 or 30 years, and are not intended to be held to maturity. Accordingly, returns to an investor generally arise from trading the ETN rather than from holding the ETN to maturity.”
Did you lose money because of Credit Suisse DGAZ ETN?
Peiffer Wolf is currently representing investors who have suffered significant losses due to unsuitable investment advice, investors with overconcentrated investment portfolios, and investors with portfolios that don’t match their risk profiles. If you are an investor who has suffered losses because of DGAZ ETN, contact us for a FREE portfolio evaluation.
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