Credit Suisse allegedly made material misrepresentations in the Prospectus for its XIV Short-Term Exchange-Traded Note (ETN) which might have led to over $700 million in losses among investors, according to a report by the Securities Litigation and Consulting Group under review by investor rights attorney Paul Scarlato.

The Goldman Scarlato & Penny investor rights attorneys are investigating alleged material misrepresentations in Credit Suisse’s XIV ETN Prospectus. Investors evaluating options other than through a class action are encouraged to contact attorney Paul Scarlato with any useful information or for a free, no obligation discussion about their options.

The XIV ETN was a popular product offered by Credit Suisse linked to expectations of future price swings, or volatility in the S&P 500 stock index, but recently plummeted by more than 97% and lost approximately $2 billion within hours in February 2018 following an enormous market selloff, according to the above-mentioned report.

Following the enormous selloff Credit Suisse made an announcement the following morning that it would redeem all outstanding XIV ETN shares at the Closing Indicative Value on February 15, 2018, the report notes.

Credit Suisse Allegedly Stopped Updating Estimates of the Value of XIV Shares While VIX Futures Prices Were Changing Significantly

The alleged problems revolved around Credit Suisse’s pricing practices. Credit Suisse allegedly made representations in its Pricing Supplement 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, in fact, did not, according to the Securities Litigation and Consulting Group report under review by attorney Paul Scarlato.

Then, on February 5, 2018, at 4:10 p.m., Credit Suisse is alleged to have effectively stopped updating its estimate of the current economic value of XIV shares when VIX futures prices were changing significantly, thus misrepresenting its estimate of the current economic value of XIV shares, the report notes.

During the next hour —from 4:10 pm to 5:09 pm on February 5, 2018— Credit Suisse allegedly misrepresented the true economic value of XIV, the report notes.

Investors were making purchases of XIV between 4:15 pm and 5:08 pm at prices as high as in the $80s while Credit Suisse allegedly had to know that the true economic value of the XIV ETNs had already plummeted to between $4.22 and $4.40, the report alleges.

XIV Investors reportedly paid $823.6 million to purchase 28.8 million shares after 4:15 pm at an average price of $28.60, and said aftermarket purchases at inflated prices transferred $700 million from unsophisticated, poorly informed buyers to sophisticated, well-informed sellers, the report states.

The VIX, sometimes called the “fear index”, is also maintained and published by S&P Dow Jones Indices. According to the report, the problems the Securities Litigation and Consulting Group identified with XIV are reportedly found in other ETNs tied to the S&P VIX futures indices.

Class Actions Recently Filed May Not Be the Best Option for All XIV ETN and VIX ETN Investors

While several class actions have recently been filed on behalf of XIV ETN and VIX ETN investors, those class actions may not necessarily be the best option for all investors. Depending on the amount invested, some XIV ETN investors – especially those with losses in the hundreds of thousands of dollars – may want to explore the option of pursuing individual claims with lawyers who represent them personally and can advise them as to their options, as opposed to being solely members of a proposed class of investors.

The Goldman Scarlato & Penny lawyers intend to represent XIV ETN investors on an individual basis, discuss their individual situation, advise them as to their individual claims, and prosecute such claims through individual client representations, not as part of a class.

Securities Lawyers Investigating

Goldman Scarlato & Penny often represents investors who lost money as a result of investment-related fraud or misconduct, and are currently investigating alleged material misrepresentations regarding Credit Suisse’s XIV ETN. The firm takes most cases of this type on a contingency fee basis and advances the case costs, and only gets paid for their fees and costs out of money recovered for clients.

XIV ETN investors with losses of over $100,000 who are interested in discussing options other than through a class action to recover their losses may contact attorney Paul Scarlato for a free no-obligation evaluation of their recovery options, at 888-998-0530, via email at scarlato@lawgsp.com, or through the contact form on this webpage.