brokerwatch

Autocallable Note Investment Loss Investigation | Autocalls Losses?

Have you suffered investment losses in autocallable notes? Peiffer Wolf is currently investigating claims against brokerage firms for autocallable notes (“autocalls”) sales.

If you believe you were a victim of investment fraud or broker misconduct, it is imperative to take action. Peiffer Wolf has represented thousands of victims and we remain committed to fighting on behalf of investors. Contact Peiffer Wolf today by filling out a Contact Form on our website or by calling 585-310-5140 to schedule a FREE Case Evaluation.

What is an Autocallable Note?

Autocallable products are structured products that are automatically called by the issuer prior to maturity if the performance of one or more reference assets meets prespecified conditions at a certain time during the term of the product. For example, if the reference asset is at or above its initial level on a specified observation date, the product is automatically called. Payment upon autocall varies, with some products offering full return of principal and others exposing investors to loss of principal. The autocall feature can be found in a variety of different structured product types, such as reverse convertibles.

Autocallable Note Losses? The broker misconduct attorneys at Peiffer Wolf will fight to recover your losses.

Brokers and financial advisors are often drawn to recommend autocallable notes because they offer higher yields. However, these investments can be very speculative and are not typically suitable for investors with a moderate or conservative risk profile. 

Risks of Autocallable Notes 

Autocallable notes contain several risks to investors, including: 

• Illiquid. Structured notes are primarily designed to be buy-and-hold investments. While some notes have relatively short maturities, measured in months, others might extend out for 10 years or more. Autocallable notes are not listed on an exchange, and there’s no guarantee of a secondary market for trading them.
• Market Risk. While some structured notes provide for the repayment of principal at maturity, many autocallable notes do not offer this feature.  In those cases, the performance of the linked asset or index may cause you to lose some, or all, of your principal.  Depending on the nature of the linked asset or index, the market risk of the structured note may include changes in equity or commodity prices, changes in interest rates or foreign exchange rates, or market volatility.
• Pricing. Prior to the issuance of a structured note, the issuer provides an initial estimated value of the note. This value is based on an internal valuation model that prices the embedded components used to structure the note’s payoff. The initial estimated value is generally less than the price of the note, meaning that you’re investing an amount per note that exceeds its estimated value.
• Credit Risk. Structured notes are unsecured debt obligations of the issuer, meaning that the issuer is obligated to make payments on the notes as promised.  These promises, including any principal protection, are only as good as the financial health of the structured note issuer.  If the structured note issuer defaults on these obligations, investors may lose some, or all, of the principal amount they invested in the structured notes as well as any other payments that may be due on the structured notes.  

If you purchased autocallable notes or were recommended to buy these products through your financial advisor or broker, Contact Peiffer Wolf today by filling out a Contact Form on our website or by calling 585-310-5140 to schedule a FREE Case Evaluation.