Investors in supposed “Yield Enhancement” strategies are learning that the purported safe investment program has significant risk. The Yield Enhancement Strategy (YES) that UBS Financial Services, Inc. (UBS) and other brokerage firms used was marketed as a “safe and efficient” way to enhance the return on a conservative portfolio.
The YES program was represented as an investment program that involved using options strategies that produced small returns but with small risks. UBS is one of a number of brokerage firms that touted the YES approach to customers as a way to make money via the “strategic” buying and selling of SPX index options spreads. The returns were purportedly “incremental” to “underlying asset returns” while giving clients a chance to possibly make money from low yield assets.
Seeking Alpha reports that the brokerage firm told clients that their UBS Yield Enhancement Strategy involved allowing a “mandate” or margin to be placed against their respective portfolios and that this would then be used, via an “iron condor” options trading strategy, to generate returns. It was these particular investors that have sustained the greatest losses when excessive volatility in December—the most that the market has encountered in 30 years—caused the YES strategy to fall.
According to Seeking Alpha, Yield Enhancement Strategy investors have lost over 20% on their portfolios in the last few months as a result of this market volatility. Many of these investors reportedly were not even aware this was a high-risk strategy and that they had to meet certain criteria to be able to use this approach.
Not only that, but many investors who took on the UBS Yield Enhancement Strategy may not even have qualified to be a part of this strategy since it involved the use of both leverage and options. Still, UBS and other investment firms – including Bank of America’s Merrill Lynch (BAC), Credit Suisse (CS), and Morgan Stanley (MS) – have reportedly continued to market Yield Enhancement Strategies to investors despite the ongoing losses.
UBS Yield Enhancement Strategy Cases
SSEK Law Firm has been meeting with investors that have suffered losses from the UBS Yield Enhancement Strategy, as well as the YES strategy of other firms. If you are one of these investors, you may have not been properly apprised of the risks or this strategy may have been unsuitably recommended to you. In either case, you may have grounds for filing an investor fraud claim with the Financial Industry Regulatory Authority (FINRA).
Whether you are a high-net-worth individual, a bank, a hedge fund, another type of institutional client, or a retail investor that sustained losses from using the YES Strategy that was recommended to you by your broker, please contact our Yield Enhancement Strategy investor fraud lawyers today. Over the years, SSEK Law Firm has gone up against the largest Wall Street firms and recovered many millions of dollars on behalf of investors.