Investor Alert: VanEck Vectors® Gold Miners ETF and the iShares® Silver Trust Callable Notes 

VanEck Vectors® Gold Miners ETF and the iShares® Silver Trust Callable Notes is a structured note sponsored by Credit Suisse. VanEck Vectors® Gold Miners ETF normally invests at least 80% of its total assets in common stocks and depositary receipts of companies involved in the gold mining industry. The iShares Silver Trust is a grantor trust designed to provide investors exposure to the price of silver in an investment portfolio. 

VanEck Vectors® Gold Miners ETF and the iShares® Silver Trust Callable Notes – High Risk Investment  

According to the prospectus, the VanEck Vectors® Gold Miners ETF and the iShares® Silver Trust Callable Notes aren’t listed on any exchange and do not guarantee the repayment of principal and do not provide for the regular payment of interest.  With the opportunity for higher yields, comes greater risks including the risk of losing your entire initial investment, according to the prospectus.  

VanEck Vectors® Gold Miners ETF and the iShares® Silver Trust Callable Notes – What are they?  

Callable structured notes offer investors the potential to achieve higher returns compared to traditional investments like bonds or stocks, while also providing some protection against downside risks. However, it’s important to note that these notes are considered high risk and complex financial products. 

When you invest in a callable structured note, you essentially purchase an investment like a bond, which is linked to an underlying asset or index, such as the VanEck Vectors® Gold Miners ETF. The note has a maturity date, indicating when you will receive your initial investment back. In the case of this note, the underlying asset is the VanEck Vectors® Gold Miners ETF and iShares® Silver Trust. 

Callable Notes vs Auto Callable Notes 

Callable notes and auto callable structured notes differ in terms of when the issuer has the option to redeem the notes. 

Callable notes give the issuer the right to redeem (or “call”) the notes before their maturity date. This means that if the issuer decides to exercise the call option, they can repay the investors and retire the notes earlier than originally planned. The issuer typically calls the notes when interest rates decrease, allowing them to refinance the debt at a lower cost. As a result, investors in callable notes face the risk of having their investment redeemed before the expected maturity, potentially missing out on future interest payments or potential gains. 

 Auto callable notes, on the other hand, also have a call feature, but with an additional condition. These notes contain a predetermined level tied to an underlying asset or index. If the underlying asset or index reaches or exceeds this specified level at any point before the maturity date, the notes are automatically redeemed (or “auto-called”). In this case, the investor receives a predetermined payout, typically higher than the interest they would have earned if the notes were held until maturity. Auto callable notes provide an opportunity for investors to capture potential gains if the underlying asset performs well. However, if the auto-call condition is met, investors lose the opportunity to benefit from any further potential appreciation in the underlying asset. 

Callable notes provide flexibility for the issuer, while auto callable notes introduce the potential for early redemption based on specific predetermined criteria.  

There are additional risks associated with investing in VanEck Vectors® Gold Miners ETF and the iShares® Silver Trust Callable Notes: 

• Early Redemption Risk: The primary risk with callable structured notes is the potential for early redemption by the issuer. If the issuer decides to exercise their call option, they can redeem the notes before their scheduled maturity date. This means investors may receive their principal back earlier than expected, potentially missing out on future interest payments or potential gains if interest rates decline. 
• Reinvestment Risk: In the event of early redemption, investors face the challenge of reinvesting their funds in a potentially lower interest rate environment. If interest rates have decreased since the initial investment, it may be difficult to find comparable investment opportunities that offer similar yields. 
• Limited Upside Potential: Callable structured notes often have a cap or limit on the maximum return that can be earned. While these notes may offer higher interest rates or coupon payments initially, the potential for further gains may be limited if the notes are called early. 
• Interest Rate Risk: Callable structured notes are sensitive to changes in interest rates. If interest rates rise significantly, the issuer is less likely to exercise the call option, which means investors may be locked into a lower interest rate for a longer period. This can lead to a decline in the market value of the notes. 
• Credit Risk: Callable structured notes are typically issued by financial institutions. Therefore, investors face the credit risk of the issuer. If the issuer defaults or experiences financial distress, investors may face a loss of principal and interest payments. 
• Liquidity Risk: Callable structured notes may have limited liquidity compared to more traditional investments like stocks or bonds. It can be challenging to sell these notes in the secondary market, especially if there is low demand or if there are restrictions on resale. 
• Complexity Risk: Callable structured notes can be complex financial instruments that may be difficult for investors to fully understand. The terms and conditions, including call provisions and payout structures, can vary between different notes, making it important for investors to carefully review and comprehend the terms before investing. 

Recovery of Investment Losses   

The White Law Group is investigating the liability that brokerage firms may have for recommending complex, often extremely high-risk, structured notes such as VanEck Vectors® Gold Miners ETF and the iShares® Silver Trust Callable Notes  

With the market in turmoil, many investors who purchased such investments believing they provided downside protection or were akin to 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 Securities 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.   

If you have suffered losses investing in VanEck Vectors® Gold Miners ETF and the iShares® Silver Trust Callable Notes, the securities attorneys of The White Law Group may be able to help.  For a free consultation, call the firm’s office at 888-637-5510.    

For more information on The White Law Group, please visit our website at https://whitesecuritieslaw.com.