According to the Financial Industry Regulatory Authority (FINRA), UBS was ordered by an arbitration panel to $1 million for alleged violations relating to the UBS Yield Enhancement Strategy. The consent, acceptance, waiver, and consent, published by the industry’s self-regulator, Jacques Andre Soileau and Jennifer Beth Plauche Soileau filed a claim against UBS in December 2020 alleging breach, careless supervision, and fraud in connection with the firm’s Yield Enhancement Strategy.
Finra reports that the claimants ultimately sought compensatory damages between $500,000 to $1 million as well as unspecified punitive damage, interest, attorneys fees, $58,644 costs, and any other remedy they deemed appropriate.
The attorneys at Haselkorn & Thibaut, P.A. (InvestmentFraudLawyers.com), have filed several cases on behalf of investors and are preparing additional legal proceedings to pursue compensation for investor losses. They are investigating the Yield Enhancement trading strategy and are willing to offer a free consultation if you believe that you were victimized by the UBS Yield Enhancement Strategy.
Matthew Thibaut, a partner with Haselkorn & Thibaut, P.A. has many years of experience as both a former financial advisor and as an attorney who has previously defended broker-dealer firms, and his observation is that: “… it’s clear that UBS clients in some instances may have told clients one thing at the time they invested, and now those same clients who are questioning unexpected investment losses in their account are being told something quite different.”
UBS requested the complete dismissal of the claim and any additional remedy granted by the arbitrator panel, according to the award document.
According to the industry self-regulatory body, UBS was ordered by the arbitrators to pay $687,403 in compensatory damage and prejudgment interest to the claimants, $58,644 as costs, $229.134 in attorneys’ fees and $425 of the initial Finra arbitration filing fee.
The YES program, which involves placing multiple options trades with different strike prices and expiration dates in order to reduce market volatility, suffered severe losses starting in December 2018. This tactic is the basis of numerous arbitration suits against UBS.
UBS Yield Enhancement Strategy
If you have lost money in the UBS Yield Enhancement Strategy, you are not alone. Many investors feel that have been ripped off because this investment is unsuitable for many investors, and some brokers who recommended it failed to adequately disclose the risks. In many cases, investors may be able to recover their losses through a FINRA arbitration claim. If you have lost money, you should consider contacting a lawyer to learn about your legal rights.
Investors lost money in UBS Yield Enhancement Strategy
The UBS Yield Enhancement Strategy was a complex scheme that involved buying and selling stock options. The strategy is also known as the “iron condor” and was marketed as a safe way to add yield to your portfolio. In reality, it was a huge mistake. Investors lost money on the UBS Yield Enhancement Strategy because it failed to provide any tangible benefits. While it’s easy to see how this scheme was a poor choice, it’s not the only one.
Whether or not you are eligible to file a claim for compensation, you should talk to an investment fraud attorney to learn more about your options. Financial industry rules require that brokerage firms provide adequate disclosure to investors. They must also offer only suitable investment products and strategies for their customers. Furthermore, portfolios cannot be overly concentrated in a single asset class. If a brokerage firm violates these rules, customers may lose money. If this occurs, you may be entitled to recover the loss through FINRA arbitration.
Investors lost money in the UBS Yield Enhancement Strategy because they were not properly educated about the risks involved. UBS sold this strategy as a low-risk investment product, which caused investors to lose money. However, it was intended to boost wealth. Unfortunately, investors didn’t understand the risks and ultimately lost money. If you lost money in the UBS Yield Enhancement Strategy, you may have grounds to pursue compensation from the FINRA arbitration board.
While the UBS Yield Enhancement Strategy was promoted as low-risk, the risks were high. Investors only discovered the full extent of their losses in late 2018 and early 2020. And the losses in UBS Yield Enhancement Strategy were not disclosed by UBS. And, even if the program was marketed as low-risk, it didn’t make much sense. While UBS claimed it was conservative, it turned out to be a scam.
The investment was unsuitable due to the risk
Many investors have lost money through the UBS Yield Enhancement Strategy and did not fit the appropriate risk profile. The program is a complex scheme designed to earn high returns when interest rates are low and markets are flat. Investors are required to commit a significant portion of their portfolios to the risky strategy. While the program is not illegal, some investors were misled into thinking it was. A number of FINRA arbitration cases have resulted from this strategy.
The investigation has focused on a number of issues that are critical to investors’ risks and portfolio safety. Specifically, the investigation has focused on UBS’s disclosure of major risks, the over-concentration of portfolios in the YES program, and the actual trading strategy. Despite its reputation as a safe, low-risk investment program, the Yield Enhancement Strategy has led many investors to suffer catastrophic losses.
The investment loss claims relating to the UBS Yield Enhanced Strategy were triggered by the market volatility in the first half of 2018. Although the firm claimed that it was a “black swan” event, investors suffered serious losses. Although the UBS Yield Enhancement Strategy is a market-neutral investment strategy, it is a risky way to invest, and losses could exceed $1 billion.
Commissions were too high
The yield enhancement strategy marketed by UBS was not appropriate for many investors. Financial advisers were incentivized to promote this strategy by charging clients 1.75% of the “mandate” (the amount of collateral dedicated to the strategy) plus a fee. Those fees were layered on top of existing fees. As a result, many investors were forced to switch to a competitor.
Investors who purchased this strategy were misled into believing it was a low-risk strategy. The Yield Enhancement Strategy utilized complex options trading and a high-risk Iron Condor strategy. Commissions were too high, and investors lost a significant amount of money. The Yield Enhancement Strategy was advertised as a low-risk, low-commission option strategy. However, the profits were too low, and the risks outweighed the payouts.
The Wall Street Journal outlined the UBS Yield Enhancement Strategy. The program was marketed as a low-risk investment strategy that was supposed to enhance returns above fixed income market yields. However, UBS financial advisors touted a 3% to 5% return rate, but it ultimately resulted in losses of more than 20%. As a result, investors poured out of the UBS Yield Enhancement Strategy. In late 2018 and early 2019, when a virus whipped around the market, the UBS-YES program was a massive failure.
While the Yield Enhancement Strategy was a sound investment strategy, the commissions were too high. The yield enhancement strategy was recommended to investors who had a good understanding of financial principles and a deep understanding of the risks. Despite this fact, investors should never blindly rely on a broker to carry out a yield enhancement strategy. Our firm is investigating the losses associated with the iron condor and other investment products sold by UBS.
Investors were misled
The allegations against UBS are based on a number of factors, including misrepresentation of risk and lack of disclosures. The firm’s “Iron Condors” program, which encouraged investors to take risks, was potentially unsuitable for some investors. Moreover, UBS’ financial advisors did not adequately disclose the risks and did not take reasonable steps to protect investors from unnecessary investment losses.
The Yield Enhancement Strategy was mis-marketed to wealthy clients by UBS brokers as a low-risk strategy. Despite the fact that it was risky, it generated positive returns during times of low volatility and huge losses when the market went into a bear market. Moreover, it involved the use of borrowed money, meaning investors were required to put additional money in their accounts when the trades went down. Consequently, the investors were forced to sell their positions at a loss, which further exacerbated their losses. As a result, UBS was facing more than two dozen investor complaints.
When UBS first marketed the strategy, marketers misrepresented it as a conservative investment strategy that would earn a higher return than a traditional mutual fund. This misrepresentation has since led to an investigation and the firm has suspended the program. This is a result of a lawsuit filed by investors in New York and California. Investors should be skeptical of these strategies, as well as any firm that promises high returns.
The Yield Enhancement Strategy was based on the “iron condor” model. An iron condor allows investors to earn incremental returns in the underlying asset. However, this strategy only works well when the underlying asset exhibits low volatility. When the volatility in the underlying asset increases dramatically, investors face significant losses. If these investments are not properly managed, investors can end up losing a significant amount of money.