Shareholders Left Hanging with BSR Delisting

June 22, 2009 by  
Filed under Commentary, ETF Closings, ETFs, ETNs

JP Morgan Chase (JPM) is not making any friends in the ETF/ETN marketplace.  Their moves have not been adequately announced or explained, leaving shareholders perplexed and angry.  The latest example is the delisting of the BearLinx Alerian MLP ETN (former ticker BSR) after the end of trading on June 12, 2009.

We predicted something was up with BSR when JP Morgan Chase quietly announced a new ETN would soon be tracking the same index.  The launch of JP Morgan Alerian MLP Index ETN (AMJ) came in April, and in May BSR changed its index from the Alerian MLP Select Index to the Alerian MLP Index.  At that time, JP Morgan had two identical ETNs.

Although JP Morgan Chase issued a press release about the delisting on May 21, many shareholders were still unaware when the delisting actually took place.  Some owners of the more than $60 million worth of shares outstanding apparently received notice, because the price dropped -13.9% that day on a significant increase in volume.  AMJ, which tracks the same index, was only down -1.2% that day, which leads me to believe that market makers were not maintaining an orderly market.

The delisting left many shareholders in the lurch – they had little or no opportunity to sell and now there is no market for their shares.  JP Morgan has not provided an over-the-counter trading symbol.  Instead, they are encouraging shareholders to open a new account and to transfer their shares in.  Once that happens, JP Morgan says they will be able to help shareholders.

A better way for JP Morgan to handle this would be to replace all shares of BSR with an equal value of shares in AMJ.  Whether this transaction is best handled as a merger or an acquisition, I will leave to others.  Much water has already passed under the bridge, but JP Morgan still has a chance to make things right.

Disclosure:  no positions

Comments

One Response to “Shareholders Left Hanging with BSR Delisting”

  1. randy knott on June 26th, 2009 12:27 pm

    Thanks to MarketWatch, they posted the link for the press release by JPM on the delisting of BSR. I had been trading in it frequently since last fall because I had discovered that it was not tracking it’s index well and would often get way ahead of NAV , and then correct. I profited from 7 or 8 consecutive Buy/Sell cycles by selling at 7-9% above NAV and re-entering at about 1% above NAV or less. I gladly jumped back in the day of the big sell-off and then noticed the press release. I sold the next day and a slight profit, which showed me that a lot of people had not gotten the message, and it continued to trade well above NAV until the delisting.

    Can the SEC not force JPM to exchange the shares of BSR for AMJ? They should do that since they were the ones providing both products. It is shameful if they don’t.

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