Reverse Convertible Notes Lawyers Based in New York
Reverse convertible notes (RCNs) are also known as reverse exchangeable securities or revertible notes. Although they are often marketed as a high yield investment, they also come with their own set of risks, which investors may not be fully aware of before putting their money in. If you have been misguidedly persuaded or pressurized to invest in RCNs and have suffered unjustified losses, legal recourse is available to you.
Get in touch with Weltz Law by calling (877) 905-7671 to find out what can be done now.
Reverse Convertible Notes Explained
As a structured investment that pays a bond at a predetermined rate of interest, RCNs are often marketed as safe, high-yielding investments. This predetermined rate is also known as the coupon rate, and because it higher than the market rate, this gives an opening for brokers to market RCNs as a high-yielding investment. The coupon rate is tied to the performance of a separate market, and it is this market that sets the coupon rate.
Upon maturity of the note, the most likely scenario is that investors will receive their lump sum back in full. They get to keep this on top of any interest rates they have earned throughout the course of the investment. Another reimbursement option is to substitute cash for the asset that was used to set the coupon rate. However, this option is only available if the price of the asset drops below a rate that was determined during the initial agreement, known as the “knock in” rate.
Proving Reverse Convertible Notes Losses
Although more experienced investors may decide to invest in RCNs fully aware of the potential risks and rewards, it is not a simple thing to explain to most investors. Despite being promoted as safe investments, brokers often fail to inform clients of the risks, which include exposure to volatility in the underlying market, difficulty selling on the secondary market and high embedded fees.
Recovering Damages from Reverse Convertible Notes Losses
Your broker has a duty of care to ensure you are fully informed of the potential risks and rewards of RCNs before encouraging you to invest in it. If you have been pressurized or persuaded to part with your money despite not understanding how RCNs work, your broker has failed to conduct their due diligence. Some brokers do this deliberately because of the hefty commissions they are eligible for when you invest in RCNs, whereas others may have been reckless and failed to consider whether your risk tolerance and financial goals fit with the investment product. If your broker is found guilty of having failed to act in your best interests, a recovery can be made in your favor.
Discuss Your Reverse Convertible Notes Losses With One of Our Attorneys Today. We Represent Clients Nationwide.
If you have been pressurized or misguidedly persuaded to invest in RCNs despite your lack of understanding, you have legal recourse. It can feel like you are all alone when you have been let down by your broker, but our knowledgeable attorneys at Weltz Law are here to help. Our team comes with a collective experience of over 30 years and can assist you with exploring your legal options as a victim of broker negligence or fraud.
30+ Years of Collective Experience
Our attorneys have over 30 years of collective experience representing clients in all aspects of securities and commercial litigation.
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Litigated Claims in Excess of $50 Million for Our Clients
Our firm has successfully recovered over $50 million for our clients.