SEC Warns Investors about Risks and Complexities of Exchange-Traded Notes

The SEC warned investors that exchange-traded notes ("ETNs") "are complex and involve many risks for investors, including in the loss of [one's] entire investment."

In its latest investor bulletin, the SEC recommended that, before purchasing an ETN, an investor should consider:

• whether ETNs are a suitable investment for the investor;
• what fees are associated with an ETN;
• whether the investor understands how the ETN's reference index or benchmark is calculated;
• whether the investor understands how the indicative values and redemption values are calculated and what they measure; and
• whether the investor understands the tax implications.