If an Advisor Lost Your Money by Shorting Volatility, You May Be Able to Recover Your Losses
What is FINRA Rule 2010? FINRA Rule 2010 is a broad, sweeping rule that is utilized to address misconduct that is not directly addressed by another FINRA rule. The rule is centered around the use of ethical business practices by brokers and financial institutions....read more
Mutual funds or ETFs that short the stock market’s volatility index, also called inverse VIX funds, bet on a stable market. So when the market dropped earlier this month, those who laid down their money on these complex wagers lost big.
Sometimes called the ‘fear gauge,’ the volatility index is pegged to expectations for the S&P 500’s performance. There are various ways to bet against it, but the most popular method is to purchase ETFs or mutual funds that bet against volatility and on a steady S&P 500. Many of these investors who lost heavily in February of 2018 purchased these inverse VIX funds through a margin account.
Risk can be high, however; sharp increases in volatility can bring dramatic losses to those who bet against such swings. On February 5, the Dow suffered its biggest ever point drop in a single day, and what had been a popular bet turned into a nightmare for investors who purchased funds such as Credit Suisse’s XIV, and LJM Preservation and Growth’s LJMIX, both of which rapidly lost about 80 percent of their value.
Other short VIX funds to suffer heavy losses include ProShares Short VIX Short-Term Futures (SVXY), VelocityShares Daily Inverse VIX MT ETN (ZIV), VelocitySharesVIX Short Volatility Hedged ETN (XIVH), and REX VolMAXX Inverse VIX Weekly Futures Strategy ETF (VMIN).
Can I Recover My Losses Suffered from XIV and VIX Inverse Securities Fraud
If you invested in a short VIX position on your own through a self-managed trading account, you are likely stuck with these losses. However, if you relied on an investment advisor or stockbroker, who recommended the investment and placed the trade, you may be able to recover your losses through a process called FINRA arbitration with the help of a manipulation lawsuit attorney at Epperson & Greenidge.
The short VIX investments are complicated, risky and often poorly understood. So, if a financial advisor recommended this investment, this may have been an unsuitable trade for you based on your risk profile, net worth, diversification of assets and other factors.
XIV and VIX Inverse Securities Fraud Lawyer at Epperson & Greenidge Can Help You
FINRA Arbitration is a unique, narrow area of the law. The securities fraud & FINRA arbitration attorneys at Epperson & Greenidge have extensive experience working within FINRA and XIV and VIX inverse securities fraud, and we specialize in bringing these arbitration claims on behalf of investors. We accept all cases on a contingency basis: We only get paid if and when you collect money. Time to file your claim may be limited, so call Epperson & Greenidge at 877-445-9261 now to speak to a manipulation lawsuit attorney for free.