Wolf Haldenstein Adler Freeman & Herz LLP has filed a class action lawsuit in the United States District Court for the Southern District of New York on behalf of investors who purchased VelocityShares Daily 2x VIX Short Term Exchange Traded Notes linked to the S&P 500 VIX Short-Term Futures Index (TVIX ETNs) [NYSE ARCA: TVIX].
The action covers purchases pursuant and/or traceable to a 29 November, 2010 pricing supplement and, together with a 25 March, 2009 Registration Statement and Prospectus, the (Offering Documents) and held TVIX ETNs through and including 22 March, 2012, thereby suffering economic damages (the Class Period). TVIX ETNs were sold to members of the Class during the Class Period by Credit Suisse AG and its affiliate Credit Suisse Securities (USA) LLC (together, “Credit Suisse” or the “Company”).
TVIX ETNs were sold to members of the Class during the Class Period by Credit Suisse AG and its affiliate Credit Suisse Securities (USA) LLC (together, “Credit Suisse”).
The complaint is styled Schottenstein v Credit Suisse AG, et al, C.A. No. 12-CV-4191 (S.D.N.Y. 2012) and a copy of it is available from the Court, or can be viewed on the Wolf Haldenstein Adler Freeman & Herz LLP website at www.whafh.com.
The complaint specifically details that on 21 February, 2012, Credit Suisse announced that it temporarily suspended further issuances of the TVIX ETNs due to “internal limits” reached on the size of the ETNs. As a result of the suspension, shares of TVIX subsequently traded at prices uncorrelated to the S&P VIX Short-term Futures index – the index that the ETN was purportedly designed to track through the use of VIX futures. This “disconnect” lasted for approximately one month.
On 22 March, 2012, shares of TVIX declined in price by over 29% as rumours leaked into the market that Credit Suisse was considering whether to recommence issuance of the ETNs. That evening, Credit Suisse announced that it would in part reopen issuance of TVIX shares on a limited basis and on 23 March, 2012, shares of TVIX declined further by almost 30% resulting in devastating losses for investors.
As detailed in the complaint, the Offering Documents used to solicit purchases of TVIX ETNs by members of the Class materially understated certain risks associated with these investments. Defendants also misleadingly omitted to disclose necessary information and material risks of certain scenarios transpiring that might lead to large losses from investments in TVIX ETNs.
Plaintiff seeks to recover damages on behalf of all purchasers TVIX ETNs during the Class Period. This is a federal securities class action and is brought by Plaintiff alleging claims under Sections 11, 12, and 15 of the Securities Act of 1933 (“Securities Act”) against Defendants.