Financial Advisors Could Have Unsuitably Recommended, Sold BDC Scorecard Portfolio Series 18 (NASDAQ: CBDCRX)

Soreide Law Group is evaluating possible investor claims of sales practice violations against financial advisors who might have unreasonably recommended or sold Guggenheim Defined Portfolios’ BDC Scorecard Portfolio Series 18 (NASDAQ: CBDCRX).


Guggenheim Defined Portfolios, Series 1970 is a unit investment trust consisting of the BDC Scorecard Portfolio, Series 18 (the Trust). Sponsored by Guggenheim Funds Distributors, LLC (Guggenheim Funds), this Trust aims to provide high current income with capital appreciation as a secondary objective.

Evidently, the trust places 80 percent of the value of its assets in United States business development companies (BDCs) which are included in the Wells Fargo BDC Scorecard Weighted Index. Therefore, this Trust concentrates heavily in the finance sector. Apparently, Wells Fargo’s BDC Scorecard Weighted Index selects BDCs by taking into account their ability to leverage, management fees and expenses as a percentage of assets, cash flow coverage of the dividend, vintage, portfolio optimization, ability to underwrite, effective leverage and qualitative factors.

As of July 24, 2020, shares of CBDCRX are worth $6.57. Its 52-week range is $4.13 to $9.87. Notably,  shares of CBDCRX took a nosedive in March and have not rebounded. Evidently, the cumulative total return since inception is -29.02% based on distributions reinvested with a transactional sales charge. Notably, Wells Fargo Business Development Company Index is down -28.44% since inception.

Risks Of Investing In CBDCRX

Risks of investing in CBDCRX include its concentration in the finance sector. This means that adverse impacts on banks, investment firms and insurance companies – which constitute financial sector companies – will have a more significant effect on CBDCRX than it would with other more diversified investments.

In addition, CBDCRX invests in BDCs which are generally risky closed-end companies that are more thinly regulated because they are exempt from federal regulations promulgated under Investment Company Act of 1940. Namely, the financial condition of BDCs relies heavily on its ability to raise capital whether through issuing stock or by borrowing. Notably, these companies are in a unique position to invest in equity and debt of smaller businesses that would otherwise be impractical for other registered investment companies to invest in. Also, BDCs are more leveraged in that they have more outstanding debt than other closed end funds. Finally, issuers of securities held by a BDC might suspend distributions, which could adversely affect the value of CBDCRX units.

Possible Financial Advisor Sales Practice Violations

It is possible that a financial advisor provided you with bad advice about CBDCRX. Specifically, some financial advisors could have failed to take into account your risk tolerance, objectives and financial needs. Others might have misrepresented CBDCRX’s risks to get you to purchase the product. Also, a financial advisor could have breached a fiduciary duty to you by placing their financial interests ahead of yours or through acting negligently.

Losses By Investing In CBDCRX Because Of Your Financial Advisor?

Lars Soreide AVVO 2020 Top Lawyer

Suffered losses because of Guggenheim BDC Scorecard Portfolio Series 18 (NASDAQ: CBDCRX) from your broker or financial advisor? If so, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represents clients on a contingency fee basis and advances all costs. The law firm has recovered millions of dollars for clients who have suffered losses due to misconduct of securities brokers and financial advisors.