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Russian Stock Investment Losses Rattle Investors

March 9, 2022

Russian stock losses, margin calls, and pension fund losses are on the rise in light of Russia’s actions in Ukraine in early 2022. National investment fraud lawyers KlaymanToskes is investigating full-service brokerage firms on behalf of investors who suffered Russian stock investment losses in their accounts.

FINRA Issues Regulatory Notice Alerting Brokerage Firms to Sanctioned Russian Entities

On February 24, 2022, FINRA issued Regulatory Notice 22-06 which alerted brokerage firms as to recent Russian sanction developments against Russian financial institutions and additional debt and equity restrictions. These sanctions were announced by the Department of Treasury (“Treasury”) after being identified by the Treasury’s Office of Foreign Asset Control.

The Russian financial institutions sanctioned include:

  • Sberbank and Sberbank’s subsidiaries
  • VTB Bank
  • Otkriti
  • Sovcom
  • Alfa-Bank
  • Credit Bank of Moscow.

FINRA Halts Over-the-Counter Trading on Russian Stocks

FINRA has also halted OTC trading in some Russian companies.

  • PJSC Aeroflot Russian Airlines Global Depositary Shares – Sponsored (OTC: AERAY)
  • Sberbank Russia Ordinary Shares (Russia) (OTC: AKSJF)
  • Sberbank Russia Sponsored American Depository Receipt (Russia) (OTC: SBRCY)
  • OJSC OC Rosneft Sponsored GDR Reg S (Russia) (OTC: OJSCY)
  • OJSC OC Rosneft Sponsored 144A GDR (Russia) (OTC: OCRNL)
  • Magma Open Jt Stk Co Sponsored GDR 144A (Russia) (OTC: MGMOL)
  • Novatek JT STK Co Sponsored GDR Reg S (Russia) (OTC: NOVKY)
  • JSC VTB Bank Sponsored Global Depositary Receipts 144A (Russia) (OTC: JSCVL)

The trading halts means that traders can no longer place bets on the stock in an OTC market.

UBS Customers Using Russian Debt as Collateral are Experiencing Margin Calls     

UBS has acknowledged that they are working on implementing the sanctions issued by various countries in response to Russian’s Ukrainian invasion. While UBS has $634 million in direct country risk exposure to Russia, UBS has $200 million in exposure to Russian assets used as collateral in UBS loans to Wealth Unit clients.

Margin calls are now being triggered on some customers who have used their Russian securities as collateral, thus requiring investors to add additional cash or securities as collateral to support their collateralized loans.

Recover Russian Stock Investment Losses due to Margin Calls

Margin calls can wipe out an investor’s brokerage account equity in a short period of time. The use of margin or other loans in many situations is considered unsuitable investment advice.

National investment fraud lawyers KlaymanToskes can help you determine whether an investment loss is the result of a financial brokerage firm and their financial advisor’s unsuitable use of margin in an investment account. If an investor suffers losses as a result of margin calls they may be able recover their losses in a FINRA arbitration claim.

Investors are Facing Deep Losses on Russian Assets

The Financial Times reports that Pension plans and hedge funds are beginning to write down their losses due to Russian investments. Less than two weeks ago, BlackRock bet on Polymetal, a Russian goldminer, and distributed it into four natural resource funds. A day after the purchase on February 24, 2022, shares plummeted 70%. BlackRock has since suspended the purchase of all Russian securities in its active and index funds. It is also actively working to remove Russian securities from broad-based indices. Polymetal is no longer a member of the FTSE 100 index.

Moscow’s equity markets are suspended and trading in many Russian companies listed abroad is halted. There are few available options if you or your pension plan is currently holding Russian assets. If you can find a buyer, you can sell at deeply discounted process or you can write the investment off to zero. In markets where Russian assets are still trading, Russian debt is trading at about twenty percent of its former value. An MSCI Index tracking Russian stock was down 95% last week.

As of March 7, 2022, major index providers FTSE Russell and MSCI have removed Russian equities from all their indexes.

US Pension Systems Suffer Losses

Russia blocked brokers from selling securities owned by foreign investors in response to sanctions for the invasion. Maine’s state employee pension system is currently made up of 1% Russian investments that have plummeted in value and are basically worthless following Russia’s invasion of Ukraine. The majority of the 22 Russian investments in Maine’s pension system are in 3 companies, Gazprom and, Lukoil and Sberbank; 2 energy companies and the country’s largest bank.

New York City Employees’ Retirement System held about $31 million in Russian securities as of February 25, 2022. It has since voted to divest from Russian securities. The New York City Employees’ Retirement System is worth $88 billion dollars.

Recover Russian Stock Investment Losses

National investment fraud lawyers KlaymanToskes can help you determine whether an investment loss is the result of a financial brokerage firm and their financial advisor’s unsuitable advice. For more information, read our Special Investor Report and contact securities attorney Lawrence L. Klayman, Esq. at 888-997-9956.

About KlaymanToskes

KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. KlaymanToskes has recovered more than $230 million for investors in FINRA arbitrations. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.

Contact

KlaymanToskes
Lawrence L. Klayman, Esq.
888-997-9956
lklayman@klaymantoskes.com
www.klaymantoskes.com