Tue. Jul 7th, 2020

Investor complaints related to UBS yield Enhancement strategy losses

2 min read

UBS is facing plenty of customer complaints regarding its complicated investment strategy that involves leverage and options contracts. USM brokers marketed YES or the Yield Enhancement Strategy to its wealthy clients. At times, when the market volatility was low, this strategy generated good returns, but, it made losses when the market volatility was high. According to reports, as YES utilized borrowed money, the investors had two options; either to sell their stocks at a loss or to add more money. The brokers did not make the investors aware of the risks related to this strategy.

Investors who have made UBS yield enhancement strategy losses in UBS YES program can recover their losses via arbitration claims. Lawyers who have experienced representing investors in broker negligence and investment fraud cases can discuss their rights. USB clients who have invested thinking the strategy was a “low-risk” and conservative were shocked when they experienced losses. Many of them are accusing the advisors and the firms who ran this strategy and misrepresented the dangers. These investors have filed several complaints with the FIRA or the Financial Industry Regulatory Authority. Some clients lost more than 20 percent of the money invested by them.

How losses were made?

The objective of the YES program was to offer to its investors better cash flow or returns on the assets that do not yield much revenue. For this goal, YES used the assets of the investors in the option strategy known as iron condor as collateral. This strategy looked good in low volatility periods. The real fact is that the volatility strategies are dependent on convexity but things become bad once a trade goes against investors. When the market witnessed high volatilities, the YES program started making losses and investors got affected badly.

Settling customer disputes

Many customers settled their disputes during arbitration and several investors were working with their advisors to recover UBS Yield Enhancement Strategy losses. Mostly the law firms who are representing customers in YES program have previous experience in dealing with customer disputes. According to the complainants, YES program was misrepresented to the investors by the USB brokers. In the cases filed, security attorneys are looking for compensation for the losses incurred by investors related to the YES program. Their claim focused on several vital matters, whether the strategy was properly disclosed to the investors and whether the trading system was in accordance with the advertised strategy.

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