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