UBS Yes Strategy Investors File Fraud Claims

Clients of UBS Group AG (UBS) who employed the firm’s Yield Enhancement Strategy (YES) are now filing investor fraud complaints after suffering at least $60M in losses to date. YES involves options trades and borrowing that was supposed to be “safe” and low risk while earning investors positive returns.

The complex investment strategy did just that while the market was stable but the volatility that ensued last year–the worst to hit the market in 30 years– caught investors by surprise. The Wall Street Journal reports investor losses of over 13% in one month alone. However, Seeking Alpha reports that losses have been as high as 20% for some investors.

For example, according to the WSJ, Sherrie Pellini, a 60-year-old UBS customer who financially supports her mom and three kids, invested $3M in the UBS YES Strategy and was charged 1.75%. She now claims her losses were $750K. Pellini is accusing UBS broker Robert Perlman of telling her that YES had not resulted in any losses for 17 years.

The WSJ says that there were two UBS portfolio managers overseeing YES and who promoted the strategy to other firm representatives. Now, UBS clients are claiming that the YES Strategy was misrepresented to them. A firm spokesperson, however, disputes this.

UBS YES Strategy
YES involves putting on four options with the same date of expiration, but not at the same strike price. UBS Customers say that they were told that through the strategic selling and buying of SPX index options spreads and an “iron condor” strategy, they could make “incremental” returns with the possibility of earning money via low yield assets.

However, since then, the YES Strategy has failed investors, many of whom suffered big losses. They are contending that misrepresentations and omissions were made to them, as were inappropriate investment recommendations. UBS clients say that they did not know how high-risk YES could be, and many are claiming that unbeknownst to them, they were never qualified to take on an investment strategy that involved options and leverage.

UBS is not the only brokerage firm that sold its clients on the YES Strategy. Other investment firms to use this approach have included Morgan Stanley (MS), Credit Suisse (CS), and Bank of America’s Merrill Lynch (BAC). Broker-dealers reportedly continue to employ YES despite investors’ steep losses.

UBS YES Strategy Claims
Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) represents high net worth individual investors, institutional investors, and retail investors. Over the years, we have recovered many millions of dollars on our clients’ behalf. Our Yield Enhancement Strategy investor fraud lawyers have been working with clients to get back the losses they sustained after this investment approach was recommended to them by brokers and their brokerage firms.

A YES Strategy investor claim is not the type of case you want to handle without experienced legal representation. Contact our YES Strategy investor fraud lawyers today for your free, no obligation case consultation. SSEK Law Firm can help you determine whether you have grounds for a case.