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Robert W Pearce
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Mr. Pearce has tried, arbitrated and mediated numerous disputes involving complex securities, commodities, administrative, contract, commercial, business tort and employment law issues for over 30 years. He has represented hundreds of clients in Federal and state courts (trial and appellate) as... More
My company:
The Law Offices of Robert Wayne Pearce, P.A.
My blog:
The Investor's Rights Law Blog
  • INVESTORS NATIONWIDE HIT WITH HEAVY LOSSES AFTER THEIR IPATH S&P VIX SHORT-TERM FUTURES EXCHANGE-TRADE NOTE INVESTMENTS TANK ON FAVORABLE ECONOMIC NEWS 0 comments
    Feb 20, 2013 10:56 AM

    Positive news from the US and Europe sent iPath S&P VIX Short-Term Futures (NYSEARCA:VXX) exchange-traded note (NYSE:ETN) sharply lower causing investors to lose 10% of their investment in just one week. The supposed hedge against market volatility suffered drastic declines as buyers came back into S&P 500 stocks due to a more promising global economic outlook. The two major factors propelling markets higher was the announcement of the European Central Bank's bond buying program and positive employment data in the United States.

    An ETN investor acts as a lender to the issuer of the note, which promises to repay the investor's principal with interest that is supposedly gauged to the riskiness of the loan - VXX was created to hold short-term futures contracts linked to the Chicago Board of Options Exchange Market Volatility Index. But the issuer's payment obligation is unsecured, and if the issuer defaults, the investor can lose his or her entire investment. ETNs have many other risks and problems including illiquidity, high fees, lack of transparency, credit (default) risk, skewed or abnormal returns, and extreme volatility.

    Investors have poured more than $5.8 billion into VXX in the past few years. In September 2010, VXX reached $2.3 billion in assets, but it has done nothing but lose money for investors - an investment of $1,000 in January 2009 would be worth approximately $25 today.

    Have you suffered losses in iPath S&P 500 VIX Short-Term Futures exchange-trade notes? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.

    The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

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