Dimond Kaplan & Rothstein in AdvisorHub UBS Article

Dimond Kaplan & Rothstein, P.A. partner and attorney Jeffrey Kaplan featured in an AdvisorHub article titled "Claims over UBS Options Strategy Soar" that discusses the issues with the UBS Yield Enhancement Strategy and why so many investors have lost money.

From the article:

"Claims against UBS Wealth Management USA over an options strategy marketed as “market-neutral” are mounting as plaintiffs’ lawyers seize on recent market volatility that some say has created losses that could reach over $1 billion. The “Yield Enhancement Strategy” (YES), introduced to UBS by a brokerage team hired from Credit Suisse in 2015, was sold to wealthy investors as a bond portfolio enhancer. The S&P 500 options strategy at worst had a “defined maximum loss” that would be limited to premiums paid, according to reports issued to investors.

YES portfolios plummeted when the S&P 500 unexpectedly lost 11% in December 2018, triggering an initial flurry of litigation from plaintiffs’ lawyers. They have lost a total of 33% in the aftermath of the March volatility amid the coronavirus crisis, according to Jeffrey B. Kaplan, a Los Angeles lawyer who has filed arbitration claims focusing on UBS’s alleged misrepresentation of the risk.

The YES cases are expected to be the leading edge of a tide of litigation that lawyers are preparing AdvisorHub in the wake of the end of the decade-long bull market. They come as UBS was hoping to put behind it years of investor claims over its role as the leading marketer of Puerto Rico bonds and bond funds that it aggressively sold before they plummeted in value in 2014. It has resolved $2.5 billion of $3.4 billion in claims through settlements, arbitration and withdrawn complaints, according to its most recent quarterly report.

About 1,500 UBS clients invested some $6 billion in the YES strategy, according to Jacob Zamansky, a New York plaintiffs’ attorney who said he has 65 claims lined up for investors seeking around $120 million in damages. The first of the YES arbitrations is scheduled to begin in June in Florida, he said.

The core of the claims is that UBS misrepresented the risks of the options strategy.

“UBS represented that it would combine put and call options on the S&P 500 Index in a ‘non-directional’ manner to generate modest income and to limit risk,” said Jeffrey Kaplan, a Los Angeles-based lawyer.  “UBS also stated that YES would have limited correlation to market movements.”

A UBS spokesman said that participation in the YES program was “generally limited” to investors with a net worth of at least $5 million and appropriate risk tolerances. “The benefits and risks of the YES strategy were clearly disclosed to our clients, and they acknowledged in writing that significant market movements could result in losses and that they should not participate in the strategy unless they were prepared for the potential of large losses,” he said.

Click HERE to read more from the AdvisorHub article.

Contact DKR Partner and Attorney Jeff Kaplan Today

Dimond Kaplan & Rothstein, P.A. has vast experience in representing investors who have sustained losses due to the negligence or misconduct of their broker and/or brokerage firm, including cases involving complex options strategies. We will aggressively pursue claims against UBS to recover your UBS Yield Enhancement Strategy investment losses.

If you are looking for an investment fraud attorney to review your rights and options, contact the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. for a FREE consultation today.

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