Investors who lost money on risky NYIAX investments may be able to recover their funds. Securities regulations prohibit brokers from recommending stocks that do not fit their investor’s risk tolerance. Speak with a securities attorney if you believe your broker may have violated securities laws when they recommended a stock that led to unexpected losses.
What is NYIAX?
NYIAX states on its website that it is bringing futures to the digital advertising market. The company’s stated aim is to use the blockchain to streamline the process of buying and selling ad spots. According to the white paper, NYIAX will use “standardized audience segments” to reduce volatility in ad spot pricing.
NYIAX is promoting futures contracts for digital ads. Futures typically derive their value from commodities like oil or gold. It remains to be seen if digital ad futures are beneficial to the contract sellers.
In October 2023, NYIAX made its stock market debut at $4 per share.
NYIAX Risks for Investors
Any broker who performed their due diligence would know that shares of NYIAX are extremely risky.
Its prospectus states that “Investing in our securities involves a high degree of risk.” It also states that the company lost $6.2 million in the first half of 2022 and lost $12.5 million in 2021.
How Do Futures Work?
Futures are contracts that allow a buyer to purchase a commodity at a certain price by a specified deadline. The futures contract buyer hopes that the price for the commodity will have increased by the time the contract deadline approaches.
- If the price has increased, they can exercise their right to purchase the commodity and then sell it on the commodities market at a profit.
- If the price of the commodity decreases, then the owner of the futures contract can allow the contract to expire.
From the contract seller’s perspective, futures are useful because they allow know for certain what price they will receive for a certain commodity. Futures may be a useful tool for their sellers, but they present a variety of risks for buyers. The price of any commodity – including ads – can fluctuate dramatically. If an investor purchased a future because they believed the price of ads for a particular standardized audience segment would increase. If it decreases, they may sell the futures contract before it expires.
Who Sold NYIAX Shares?
Westpark Capital served as a placement agent for these securities. “Placement agents” find suitable investors for certain securities. Investors who were solicited by their brokers for these investments should be financially able to withstand a total loss.
What Can a Securities Attorney Do for Me?
There are securities laws and regulatory rules designed to keep brokers in check. Brokers who recommended shares of NYIAX may have violated Regulation Best Interest, which requires brokers to exercise reasonable duty and care when they recommend securities. Brokers who exercised care would have communicated the high risks associated with a NYIAX investment.
If you suffered losses due to broker misconduct, contact the experienced securities attorneys at Kurta Law: (877) 600-0098.