Imagine being able to limit your losses and predict your profits. Sounds too good to be true, right?
UBS investors were told that the firm’s Yield Enhancement Strategy, or YES, was a sure thing.
UBS pitched the YES strategy to clients as a neutral or low risk way to generate returns through an options trading strategy known as the “Iron Condor.” The result has been a disaster for YES investors.
UBS dangled large financial incentives in front of advisers to sell the YES strategy. The fee was 1.75% of the client’s so-called “mandate” – meaning the amount of collateral dedicated to the strategy – whether the assets were actually traded or not.
As a result, financial advisors solicited mandates from clients which far exceeded the amounts clients intended to commit to YES.
That 1.75% fee caused YES portfolio managers to become aggressive in order to generate the target net return to the client of 3 to 5%. That over reach by the managers has resulted in significant losses. After the December market volatility, YES lost an astounding 20 % !
The YES strategy is not transparent to investors on any level. Investors receive account statements which reflect various trades in options, but it is virtually impossible for clients to monitor the strategy.
Investors are therefore forced to blindly rely upon the UBS YES portfolio managers. As a result, YES investors can suffer huge losses that cannot be foreseen or avoided until it is too late.
Our investigation has led to many yet unanswered questions.
Were the UBS Yield Enhancement Strategy portfolio managers caught off guard in December 2018 and forced to change course?
Did UBS financial advisors properly disclose the risks of YES to their customers and properly qualify them for high risk options trading?
Did UBS monitor the trading for potential losses in clients’ accounts ?
We look forward to uncovering the answers to these questions and more over the coming months as UBS YES customers proceed with their investment fraud arbitration cases.
Zamansky LLC is a New York law firm which represents investors in court and arbitration cases against securities brokerage firms and issuers. The firm may represent investors in cases against companies mentioned in this blog. Zamansky LLC also represents investors in arbitration cases against UBS and other brokerage firms regarding Puerto Rico bonds and UBS closed end bond funds and other investments. https://www.puertoricobondfundsattorney.com/en/