Defective Securities Products

In broad terms, a defective securities product is one that is invalid, cancelled, matured, untransferable, or unregistered. Defective securities products are often times highly complex and incredibly risky. These products are typically not in the best interests of any investors.

Defective securities products come in various forms. One large subsection of such investments is proprietary products. Some other well-known examples include cryptocurrencies, NFTs, collateralized debt obligations, collateralized mortgage obligations, mortgage-backed securities, leveraged ETFs, private placements, closed end funds, and private REITs.

Proprietary products are ones that brokerage firms create or package in-house. Since proprietary products are created by brokerage firms, they tend to have very limited, if any, trading histories. A lack of trading history makes it exceedingly difficult for an investor or a broker to evaluate the risks associated with a particular investment.

Cryptocurrencies are digital or virtual assets that are unregulated and offered by private actors rather than a central authority, like the U.S. government. Crypto investments are highly speculative and incredibly volatile. Further, the crypto space is rife with scams and fraudulent activity as evidenced by recent SEC enforcement actions. Investors should be hyper vigilant about purported cryptocurrency investment opportunities.

Defective securities products often times are challenging to track and difficult to understand, even for brokers. These investments also tend to be highly illiquid and can, sometimes, even expose investors to large losses greater than their initial principal investment.

If your broker or advisor recommended investments in defective securities products, Malecki Law is eager to hear from you. The highly qualified attorneys at Malecki Law can evaluate the merits of your claims and, potentially, help you recover your losses.