Investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. (“DKR”) have filed additional FINRA arbitration claims against UBS Financial Services, Inc. on behalf of UBS customers. The investors lost a significant amount of money in UBS Yield Enhancement Strategy or the “YES” options program. The claims allege that UBS misrepresented the risks of the options program, failed to implement proper risk controls, and failed to adequately supervise the YES options program.
UBS YES Program Exposed Investors to Great Risk
UBS represented that its YES program was a low-risk way to generate modest income. But the options strategy actually was complex and fraught with risk that caused significant investor losses.
While options investing generally is considered to be risky, some securities professionals claim they can combine options in a way that will limit the risk of loss. UBS represented that its YES program involved buying and selling puts and calls on the S&P 500 Index and UBS’s YES marketing materials touted “downside protection” as a central feature of the Yield Enhancement Strategy. But UBS failed to deliver on that promise.
Where Was the Promised Downside Protection?
Notwithstanding UBS’s representations about the purported “downside protection” of its YES options program, YES investors suffered large losses in December 2018. UBS then issued a report blaming unexpected market volatility in December 2018 as the cause of YES investors’ losses. But UBS’s marketing materials stated that YES was structured to “prepare for unexpectedly volatile market conditions.” It appears that UBS failed to prepare for market volatility, as it said it would do and now is refusing to take responsibility for investors’ losses.
We believe that UBS misrepresented the risks of its Yield Enhancement Strategy and failed to implement risk controls that could have provided the promised “downside protection”.
Investors May Be Able to Recover Their UBS Yield Enhancement Strategy Losses
It has been reported that there were approximately 1,500 UBS YES investors who, collectively, had approximately $5 billion to $6 billion exposed to the YES options strategy. Total YES losses could exceed $750 million.
UBS YES investors can file FINRA arbitration claims in an effort to recover their YES losses. FINRA arbitration is a mandatory, private dispute resolution process for investment-loss disputes that customers have with brokerage firms. The process generally is more time and cost-efficient than courtroom litigation. If you lost money in UBS’s Yield Enhancement Strategy you should contact a lawyer who has FINRA arbitration experience and who has represented investors who lost money in risky options strategies.
DKR already has filed FINRA arbitration claims on behalf of a number of UBS YES investors and will aggressively pursue recovery of investors’ Yield Enhancement Strategy losses. Our firm has extensive FINRA arbitration experience representing investors who have lost money due to the negligence or brokerage firm misconduct. DKR also has handled numerous cases over the years involving risky options strategies