Written by The White Law Group• May 17, 2023• 6:26 pm• Blog

Uncapped Barrier Notes Linked to ARK Genomic Revolution ETF

Securities Investigation: Uncapped Accelerated Barrier Notes Linked to the Least Performing of the ARK Innovation ETF, the ARK Genomic Revolution ETF and the ARK Next Generation Internet ETF

The White Law Group is investigating potential securities claims involving broker dealers who may have improperly recommended Uncapped Accelerated Barrier Notes Linked to ARK Genomic Revolution ETF to investors.

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Complex Investment Product – Structured notes

According to the prospectus, Uncapped Accelerated Barrier Notes Linked to ARK Genomic Revolution ETF, sponsored by JP Morgan Chase, is a complex investment product.

You could lose all of your investment. “The notes do not guarantee any return of principal. If the Final Value of any Fund is less than its Barrier Amount, you will lose 1% of the principal amount of your notes for every 1% that the Final Value of the Least Performing Fund is less than its Initial Value…under these circumstances, you will lose more than 20.00% of your principal amount at maturity and could lose all of your principal amount at maturity.”

According to the prospectus, payments on the notes are not linked to a basket composed of the Funds. Payments on the notes are linked to the performance of each of the Funds individually. The payments on the Notes will depend on the individual performance of the ARK Innovation ETF, the ARK Genomic Revolution ETF and the ARK Next Generation Internet ETF. These are considered the “Underlying”.

Understanding the Risks – What are Uncapped Accelerated Barrier Notes?

Here’s an explanation of the key characteristics of these structured notes:

Uncapped accelerated barrier notes linked to the least performing are tied to a group of assets or indices. The return on the notes is determined by the performance of the least performing asset or index within that group over a specified period. These notes have a predetermined barrier level, which represents a threshold that the least performing asset or index must not breach during the specified period. If the performance of the least performing asset or index falls below the barrier level, it may trigger certain consequences or adjustments to the investor’s return.

The term”Uncapped” means there is no upper limit or cap on the potential return the investor can receive. The investor’s return on uncapped accelerated barrier notes linked to the least performing asset or index is not restricted, allowing for the full potential of positive returns on the least performing asset or index.

“Accelerated” indicates that the return calculation is expedited or adjusted based on the performance of the least performing asset or index. This means that if the performance exceeds a certain threshold or meets certain conditions, the investor may be entitled to an enhanced or accelerated return.

It’s important to note that uncapped accelerated barrier notes linked to the least performing assets or indices are complex investment products and carry various risks. The exact mechanisms and adjustments tied to the least performing asset or index, as well as the associated risks, should be carefully reviewed in the offering documents and discussed with a financial professional.

Like other structured products, uncapped accelerated barrier notes linked to the least performing carry certain risks. These risks may include market risk, credit risk, liquidity risk, and complexity risk. Investors should thoroughly assess the terms and conditions, understand the risks involved, and seek professional advice before making investment decisions.

Significant Risks to Consider

There are additional risks associated with investing in Uncapped Accelerated Barrier Notes Linked to ARK Genomic Revolution ETF:

Performance Risk: The return on uncapped barrier notes is tied to the performance of the least performing asset or index among a group. If the chosen asset or index performs poorly during the specified period, it can result in a lower or negative return for the investor.
Barrier Breach Risk: Uncapped barrier notes have a predetermined barrier level that the least performing asset or index must not breach during the specified period. If the performance falls below the barrier level, it can trigger adverse effects on the investor’s return. Breaching the barrier may result in a reduction or elimination of potential returns or a return linked to a different asset or index.
Market Risk: Uncapped barrier notes are exposed to general market risks. Changes in market conditions, including economic factors, interest rates, volatility, and geopolitical events, can impact the performance of the underlying assets or indices and, subsequently, the return on the notes.
Credit Risk: These notes are typically issued by financial institutions, so investors face the credit risk of the issuer. If the issuer experiences financial difficulties or defaults, investors may face a loss of principal and interest payments.
Liquidity Risk: Uncapped barrier notes may have limited liquidity in the secondary market. It can be challenging to sell these notes before maturity, particularly if there is low demand or restrictions on resale. Investors should consider their investment horizon and potential liquidity needs.
Complexity Risk: Uncapped barrier notes can be complex financial instruments with intricate terms and conditions. It’s important for investors to fully understand the features, risks, and potential outcomes of these notes. Complex structures may make it difficult to evaluate and assess the investment properly.

Did your Broker Recommend Uncapped Accelerated Barrier Notes?

The White Law Group is investigating the liability that brokerage firms may have for recommending complex, often extremely high-risk, structured notes such as Uncapped Accelerated Barrier Notes Linked to ARK Genomic Revolution ETF.

With the market in turmoil, many investors who purchased such investments believing they provided downside protection or were like bonds because of the dividend component are instead finding that these products can indeed suffer enormous losses.

Brokers often pitch structured products, as providing “downside protection” against losses to a related index while allowing modest upside gain potential. Of course, this is only true if the value of the index doesn’t fall below a predetermined price. If the price falls below that point, the losses in structured notes can still be huge.

These products typically pay a high fee to the financial advisors that sell them.

Brokerage firms have two main duties in recommending structured callable notes linked to equity investments or indexes. First, brokerage firms are required to perform adequate due diligence on any product they recommend. Second, brokerage firms are required to ensure that all recommendations made are suitable for their client in light of the client’s age, investment experience, net worth, income, and investment objectives.

If a brokerage firm fails to do either of these things, the firm can be held responsible in a FINRA arbitration claim.

Hiring a FINRA Attorney

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.

Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.

With over 30 years of securities law experience, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions attempt to recover their investment losses.

The firm reviews securities fraud cases throughout the country.