Investors Claim UBS YES Strategy Was Mismarketed To Them: SEC Looking Into the Allegations
If you are an investor whose UBS broker recommended that you employ the UBS YES (Yield Enhancement Strategy) and you’ve since suffered significant losses, you may have grounds for an investment fraud claim.
Unfortunately, UBS and its registered representatives may have been making unsuitable recommendations of this complex investment strategy to customers, as well as misrepresenting the risks involved.
This has allegedly resulted in at least $60M in investment losses, although that figure is likely higher. Now, according to the Wall Street Journal, the US Securities and Exchange Commission (SEC) is looking into how UBS marketed its YES Strategy.
UBS YES: What Is The Iron Condor Approach?
Generally marketed to wealthy investors, the UBS Yield Enhancement Strategy borrows against a client’s holdings, takes the proceeds to trade options, and uses an option overlay strategy called the iron condor strategy.
With the iron condor, the trader uses four options with identical expiration dates but differing strike prices. Two spreads are usually set up while selling puts and calls to turn a profit and buying to hedge risks so as to keep losses minimal–at least that is what investors expected would happen.
As a matter of fact, customers contend that they were told during sales pitches and in marketing collateral that UBS YES was a conservative strategy and, yet, they could expect to yield income on a regular basis.
Instead, UBS YES Strategy investors have suffered losses of 20% or greater. For many, this means losses in the six and seven figures.
That’s because market conditions have to remain relatively calm for UBS YES to remain low risk. Instead, at the end of 2018, market volatility compelled the CBOE Volatility Index to reach its highest level in years, and that’s when the UBS YES losses started to really kick in. Meanwhile, COVID-19 in 2020 has continued to wreak even more havoc on the markets.
It doesn’t help that UBS also charged YES customers up to 1.75% in yearly fees on all of their borrowings, even if the whole amount wasn’t used. This was in addition to other fees customers were paying on the underlying assets.
UBS Brokers Accused of Misrepresentations and Omissions, Unsuitable Investments
Already, a number of UBS stockbrokers have come under fire for their role in pushing UBS YES onto firm customers.
Christopher Tolman and Matthew Buchsbaum, in particular, have been accused of heading up the broker-dealer’s efforts to get other registered representatives to market the strategy to customers. According to BrokerCheck, Tolman already has two pending UBS YES investor fraud claims naming him, while Buchsbaum has more than 20 UBS YES fraud claims awaiting resolution.
A third UBS broker, Scott Rosenberg, is named in over 12 pending UBS YES customer disputes. There are also the other UBS brokers who have touted this strategy to their customers.
Speak with Experienced UBS YES Strategy Attorneys
Contact Shepherd Smith Edwards and Kantas (SSEK Law Firm) today to speak with one of our UBS Yield Enhancement Strategy fraud attorneys today so that we can help you explore your legal options. SSEK Law Firm represents investors throughout the US and offers a free, no-obligation case consultation.
Fill out our online form or call us on (800) 259-9010.