VelocityShares Daily Inverse VIX Short Term ETN (XIV) Exchange Traded Notes connected to the inverse of short term VIX futures prices shed 94% of their $1.9 billion asset value in a single day on February 5, 2018, according to a report from securities litigation consultant Dr. Craig McCann published on LinkedIn under review by attorneys in our firm.
The Goldman, Scarlato & Penny attorneys are investigating alleged material misrepresentations regarding Credit Suisse’s XIV’s Prospectus. Investors who believe they have suffered more than $100,000 in losses are encouraged to contact attorney Paul Scarlato with any useful information or for a free, no obligation discussion about their options.
While class action cases have already been filed, a class action may not be the best option for all XIV ETN investors, especially large investors. The Goldman, Scarlato & Penny attorneys are evaluating individual representation, on a contingency fee basis, on behalf of investors with losses in excess of $100,000.
Exchange Traded Notes (ETNs)
Exchange Traded Notes (ETNs) are senior, unsecured debt obligations issued and backed by underwriting banks such as Credit Suisse, and Barclays, and base potential returns on the performance of specific benchmarks or strategies tied to a particular market index such as the DJIA or the S&P 500. ETNs are traded on major exchanges such as the NYSE or NASDAQ, even thought they are not a traditional security.
Volatility Index (VIX) ETNs bet on volatility within a given market. With market volatility essentially flat over the past few years, investments in inverse VIX ETNs have grown in popularity. Inverse VIX ETNs (or XIV ETNs) generate returns when market volatility is low.
On February 5, 2018, the VIX experienced a significant spike causing enormous losses for investors who held XIV ETN’s. Many of the XIV ETNs were halted the following morning and Credit Suisse announced that it would redeem all outstanding XIV shares at the Closing Indicative Value on February 15, 2018, according to the above-mentioned report.
XIV ETN Investor Losses Due to Alleged Failure to Publish Accurate Prices
Credit Suisse stated that it would publish an estimate of the current economic value of XIV shares every 15 seconds based on real time VIX futures prices but, failed to do so, according to the McCann report under review by attorney Paul Scarlato.
Credit Suisse then stopped updating its estimate of the current economic value of XIV shares at 4:10 pm when VIX futures prices were changing significantly, the report states.
Investors paid $823.6 million and purchased 28.8 million shares after 4:15 pm at an average share price of $28.60, according to the report. Those aftermarket purchases at inflated prices transferred roughly $700 million from unsophisticated, uninformed buyers to sophisticated, well-informed sellers, the report concludes.
Securities Lawyers Investigating
The Goldman, Scarlato & Penny law firm represents investors who lose money as a result of investment-related fraud or misconduct, and are currently investigating whether the Credit Suisse’s XIV Prospectus contained material misrepresentations.
The firm takes most cases of this type on a contingency fee basis and advances the case costs, and only gets paid for fees and costs out of money recovered for clients. Attorney Paul Scarlato, a securities lawyer, has represented thousands of victimized investors across the country and around the world in cases ranging from arbitrations to class actions, and has helped recover tens of millions of dollars on behalf of investors.
What Should XIV ETN Investors Do
Investors who believe they have suffered losses in excess of $100,000 as a result of the alleged material misrepresentations regarding Credit Suisse’s XIV’s Prospectus may contact attorney Paul Scarlato for a free, no-obligation evaluation of their recovery options, at 888-872-6975, via email at firstname.lastname@example.org, or through the contact form on this webpage.