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Velocity shares 2x long VIX investigated by Massachusetts after 60% drop

Massachusetts’s securities regulator said it is looking into an exchange-traded note managed by Credit Suisse hat has lost 60% of its value in the past week.

The Massachusetts inquiry comes as the Securities and Exchange Commission also is looking into the product. The SEC review is preliminary, according to people familiar with the matter. Meanwhile, the Financial Industry Regulatory Authority also has been monitoring the situation. “We have been closely looking at the events and trading around [the exchange-traded note], but cannot comment beyond that,” a Finra spokesman said.

Secretary of the Commonwealth William Galvin submitted a written request on March 23 to Credit Suisse for information and documents related to every purchase of shares in the VelocityShares 2x Long VIX Short Term Exchange note from Feb. 20 to March 23. The regulator also is seeking information on what time Credit Suisse filed its statement with the SEC on its plans to reopen issuance of the exchange-traded note, or ETN, beginning on March 23 and who was involved in making that decision.

The scrutiny comes amid investor concern over trading in the ETN. The Credit Suisse product, which is designed to track stock-market volatility, plunged last week even though market volatility was little changed.