Equity-Linked Notes (ELNs) Attorneys Based in New York
Equity-Linked Notes (ELNs) are a type of structured note. They are commonly utilized by investors to rake up higher cash returns when they have a more stable view of stocks. If you believe you are not benefiting from Equity-Linked Notes and would like legal assistance, speak to our securities litigation attorneys at Weltz Law.
Our field expertise will get you compensated accordingly. Call (877) 905-7671 to schedule your consultation.
How Do Equity-Linked Notes (ELNs) Work?
During the initial discussion stage, investors select the stocks and ELN that fit their individual criteria. They then proceed with an investment on the principal amount at a much smaller rate that represents the yield on the ELN. As ELNs have an immediate discount of their market price known as strike price, investors often act fast to lock in the lower margin.
Subsequently, any reduction of stock price will see the issuer of the ELN delivering the stock to the investor upon its maturity at the original discounted price. If the stock price closes at or above the original discounted price upon maturity, the investor gets the full principal amount. The amount difference between the principal disbursed and the initial amount paid represents the investment yield.
Risks of ELNs
Every investment option involves risks including Equity-Linked Notes which are explained in depth below:
- Market risk – As the performance of an ELN is affected by underlying shares, its value fluctuates. This may adversely affect its overall value in the long run.
- Credit risk – ELNs are supported by the issuer of their underlying shares. If the issuer defaults, investors will lose a part of their investment or all of it.
- Principal-at-risk – ELNs are not principal-protected which means investors could lose a part of their principal investment or the full amount.
- Liquidity risk – The next market is basically illiquid which means ELNs are not recommended for investors without any other financial means to sustain continuous investments until maturity.
Disadvantages of ELNs
ELNs consist of a number of underlying company shares which banks often emphasize to project them as a safe product to invest in. However, under a certain circumstance whereby one of the company’s share price falls below the strike price, the total investment amount will be converted to the shares of the worst performing company.
The conversion will be based on the stock price when the ELN was first purchased instead of its eventual price. This may cause investors to lose a huge percentage of their investments. This is how banks take advantage of investors who positively view ELN as a safe product thanks to its support base of a number of company shares.
Discuss Your ELNs Case With Our Dedicated Attorneys. We Serve Clients Nationwide.
If you have invested in Equity-Linked Notes (ELNs) and would like to get out of the contract due to misinformation, our attorneys possess credible expertise to navigate through the necessary legal procedures. Some investors have suffered massive losses in an ELN investment which is a completely different story to what banks initially painted during prior discussions.
30+ Years of Collective Experience
Our attorneys have over 30 years of collective experience representing clients in all aspects of securities and commercial litigation.
Contingency Fees for Our Securities Law Clients
We will not receive a penny in attorney's fees unless a positive recovery is obtained in your case. Contact us to see if you're eligible.
We will assess the merits of your claims and help you decide on the next step.
Litigated Claims in Excess of $50 Million for Our Clients
Our firm has successfully recovered over $50 million for our clients.