We represent investors who suffer losses as a result of their brokerage firms or investment advisors selling them problematic structured products.

Structured products are complex investments that do not hold a generally accepted definition, but usually start with a traditional security such as a bond. Instead of payments coming from the issuer’s own cash flow and eventual return of principal to the investor, however, the issuer then substitutes payments derived from the performance of one or more underlying assets.

Structured products only pay dividends if the underlying assets perform sufficiently. Therefore, the investor will only get “Y” if the underlying assets return “X”.

While structured products can sometimes seem attractive to investors because they offer higher returns and a level of principal protection, they can also have significant drawbacks such as credit risk, market risk, lack of liquidity, and high hidden costs, according to warning from FINRA going back to 2011.

The complex, and sometimes hard to understand, features of many structured products opens investors to fraud, yet they often are marketed to consumers as a predictable source of income or a conservative investment, and often ignore the substantial risk posed by such derivatives.

Brokers, financial advisors, and brokerage firms might give assurances to investors of the safety of structured products by referring to the product’s credit rating, even though they are not related to the potential performance of the investment.

The sale of structured products can violate a broker’s obligation to recommend only suitable investments and to present a fair and balanced picture of the risks and benefits of an investment.

Risks for structured products include but are not limited to:

  • Limited liquidity and Credit Risk of the issuer and/or conflicts of interest
  • Fluctuations in the interest rates, currency values, and credit quality of issuer
  • Limits on participation in appreciation of the underlying investments
  • Substantial or complete loss of principal
  • Fluctuations in the price, level, or yield of underlying investments

If you believe you may have lost money as a result of purchasing a structured product from a broker or financial advisor, please contact us for a free, no-obligation consultation regarding your legal situation and potential recovery options, by phone at 888-998-0530, via email at arosca@roscalaw.com, or through the contact form on this page.