Oppenheimer PEP Loss Attorneys

Did Your Oppenheimer Broker Sell You on Its Portfolio Enhancement Program? Broker-Dealer Encouraged Customers To Borrow On Margin 

For more than a year, Shepherd Smith Edwards and Kantas Oppenheimer PEP Loss Attorneys (investorlawyers.com) have been investigating claims of losses by investors whose Oppenheimer broker sold them on the firm’s Portfolio Enhancement Program (PEP). There are growing concerns about misrepresentations, margin abuse, and financial advisor misconduct or negligence.

Oppenheimer PEP is now shuttered. However, this may have been a little too late for some investors, who are saying that they sustained serious losses.

The proprietary program was promoted as a hedged investment that gave participants an opportunity to earn another 5% if they borrowed on margin. Because the minimum investment for this strategy was $1.5M, it was only offered to accredited and wealthy investors.

Unfortunately, a low-interest, low-volatile environment was needed if Oppenheimer PEP was to perform as promised. Instead, this high-risk investment had to deal with less favorable conditions.

It didn’t help that its strategy relied on the performance of options on indexes while taking a chance that the latter would remain within a tight range. Now, investors are saying they were never fully apprised of the risks they were taking on or how reliant Oppenheimer PEP was on market conditions.

Already, at least one investor is suing for $2.5M in damages. This retiree claims that he was looking for a safe way to make money. Instead, Oppenheimer broker Matthew Steinberg allegedly unsuitably recommended Oppenheimer PEP, and he sustained serious losses.

What Does It Mean to Borrow or Buy on Margin?

Margin borrowing is when the broker-dealer lends money to a customer to buy more securities. While this can be an appropriate strategy for certain investors, it is unsuitable for most.

There are risks involved. Not only must the investor repay the money borrowed at some point, but there will also be interest to pay. With margin accounts, a minimum equity has to be there at all times.

For an investor to make money from transactions, the investment must do well enough so that the purchase price, broker commissions, and interest charged on the loan are covered and then some. If the value of the securities in a margin account drops substantially, the broker-dealer may issue a margin call.

This is when the investor has to come up with more collateral for the mortgage loan while covering the decline in value of the stock.

To do this, the investor can either deposit more funds or securities into the account. If they are unable to meet this requirement, the broker-dealer will sell the securities, often at a distressed price.

In addition to potentially significant losses, the investor will still owe the firm the amount borrowed minus any proceeds from the securities sales.

Contact Our Oppenheimer PEP Loss Attorneys

Our Oppenheimer PEP loss attorneys can help you determine if you have grounds for a claim against the broker-dealer over your Portfolio Enhancement Program losses.

Your Oppenheimer broker may not have fully apprised you of the risks, concentrated your account, unsuitably recommended this risky strategy to you, or engaged in some other type of broker misconduct or negligence.

Shepherd Smith Edwards and Kantas Oppenheimer PEP Loss Attorneys has the skills, knowledge, resources, and experience to pursue broker-dealers whose actions involving margin accounts played a part in investor losses. When you work with us, you are retaining everyone at our firm to fight for you.

More than 90% of investors have secured full or partial financial recovery with our help. Call our Oppenheimer PEP Loss Attorneys at (800) 259-9010 or fill out this form.