Risk Considerations

The following list includes common risks or characteristics associated with market-linked notes and CDs. It should by no means be considered a complete list of all possible risks associated with the multitude of Market-Linked Products that are currently available in the marketplace.

Risk of Loss

There is a risk of loss when investing in market-linked products and investors could lose the entire amount of their investment.

Complex Payout Structures

The payout structures for each product vary and are often complex. Market-Linked Products may have complicated limits or formulas for the calculation of investor return. Investors should refer to the offering documentation for specific details of the respective Market-Linked Products.

Secondary Market Risks

There is liquidity risk when selling prior to maturity, as there may not be a liquid secondary market for the product. Additionally, the value of the investment may be worth less than the initial investment, irrespective of the market-linked payout at maturity.

Legal and Tax Considerations

There are legal risks involved with holding complex instruments, as regulatory and tax considerations may change during the term of the investment.


Investors should refer to the relevant offering documents for additional details regarding the fees and built-in costs, including information regarding how fees will reduce return on investment. Investors should also consider other fees that may be charged by financial professionals, including management fees, sales charges or commissions.

Issuer Considerations

Principal Protection

Depending upon the structure of the product, the Market-Linked Products may contain language regarding principal protection. Principal protection is always subject the ability of the issuer to meet its claims paying obligations. Investors should refer to the respective offering documents for the amount of principal protection that a product may offer.

FDIC Insurance

Some market-linked certificates of deposit (“CDs”) may contain language regarding FDIC insurance. There should be no inference drawn regarding the applicability of FDIC insurance with Market-Linked Products, as only market-linked CDs may contain FDIC insurance. market-linked notes and securities do not contain any FDIC insurance.

Credit Risk

The creditworthiness of an issuer must be considered when investing in a principal protected or non-principal protected notes, as market-linked notes are not guaranteed by the government, the underwriter or any other entity. A market-linked product represents an unsecured obligation of the respective issuer.

Bankruptcy Risk

An investor faces the risk of not receiving any payment on its investment if the relevant issuer files for bankruptcy or is otherwise unable to pay its debts.

Complex Features and Underlying Securities Considerations

Market Risk

The value of the Market-Linked Products may depend upon the value of the underlying index or security(ies). Investors do not directly participate in the returns of the underlying index or security(ies).

Income Risk

Under certain structures, anticipated income may not be fixed or guaranteed and may be dependent upon the performance of an underlying index or security(ies). Investors should review the offering documents to determine how distributions are calculated.

Payout Features

Depending upon the products structure, return at maturity may be in the form of a pre-determined number of shares in the underlying stock, rather than cash, and may be based on the performance of the underlying security(ies) or index. The market value of those shares may be substantially less than the principal amount of the notes and in certain cases may be zero. In some structures, investors may not participate in all or even a portion of any increase in value of the underlying security. Investors should review the offering documents to determine how the return on the structure is calculated.

Call Features

market-linked notes may have early redemption rights for the issuer of the security, which if exercised would result in a required redemption prior to maturity and loss of any remaining coupon payments. It is likely that an early call by the issuer will be to the issuer’s advantage and to the disadvantage of the investor. In certain structures the call may occur automatically based on the performance of the underlying index or security.

Foreign Currency Risks

Investors may be exposed, directly or indirectly, to foreign currency risk due to any foreign currency(ies), securities or commodities that may be linked to the respective market-linked product. The prices of non-U.S. currencies, commodities or securities may be greatly affected by economic, financial, political, and social factors in the home country of the securities issuer, including but not limited to, changes in the country’s government, legislation, economic and fiscal policies, currency exchange laws or other laws.

Other Considerations

Past performance is not indicative of future results. An underlying index (or security(ies)) can fall as well as rise.

market-linked products are complex financial instruments and product features may greatly vary from product to product. Always thoroughly understand the product features and risks before investing and consult with a qualified financial professional and tax advisor. As with any type of investment, prudent investors should diversify their portfolios with the assistance of a qualified financial professional.

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