A Financial Industry Regulatory Authority arbitration tribunal ordered UBS Financial Services, Inc. to pay more than $1.8 million to investors who suffered losses in UBS’s Yield Enhancement Strategy (“YES”), a complex options strategy that exposed unwitting investors to significant risk of loss. This was the latest in a string of YES-related arbitration victories for Dimond Kaplan & Rothstein, P.A. (“DKR”).
The Claimant in DKR’s most recent YES victory is the trustee for two trusts. He had accused UBS of misrepresenting the nature and risk of the UBS YES options strategy, failing to disclose all material risks of YES, and failing to implement the YES options strategy in a manner that was consistent with how UBS had marketed the strategy. The FINRA arbitrators presiding over the case awarded compensatory damages in the amount of $517,020 to one of the trusts, in addition to pre-judgment interest of $49,118. The arbitrators ordered UBS to pay the other trust and $1.17 million in damages and $111,260 in pre-judgment interest. The arbitrators also ordered UBS to reimburse DKR’s client for nearly $27,000 expert witness fees. Finally, the FINRA arbitrators denied UBS's request to remove the disclosures about the case from the public records of William Montgomery "Monty" Cerf and Matthew Buchsbaum, the investor’s UBS broker and the head trader for the UBS YES strategy, respectively.
The UBS YES strategy, which Buchsbaum and his colleagues brought to UBS from Credit Suisse in late 2015, was a complex option spread strategy that suffered nearly $1 billion in losses in 2018.
"We think and have demonstrated that UBS deceived investors," stated the investor’s lawyer, Jeffrey B. Dimond Kaplan & Rothstein in Miami, Florida. Kaplan said that emails authored by Cerf undermined Cerf’s and other UBS representatives' testimony.
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