The first lawsuit against financial advisor Jose Cornide (CRD#: 2785918), a representative of UBS Financial Services (CRD# 8174) accused of “unsuitability and misrepresentation with respect to recommendations to invest in and hold an options overlay strategy” was file by an attorney in April 2019, representing a client. The damages claimed are $10,000,000 and the options overlay strategy referred to is the Yield Enhancement Strategy (YES) of UBS.
It soon became a torrent with cases filed in June, July, and August of 2019. The charge was the same – unsuitability and misrepresentation with respect to recommendations to invest in and hold an options overlay strategy as offered by UBS YES. An amount of $1,200,000 is known to have been claimed as damages in the June case and $500,000 in the August one.
All the above disputes are pending at this point.
Financial Advisor Jose Cornide – A Brief History
According to his FINRA (Financial Industry Regulatory Authority) BrokerCheck record, between 1996, when he started working in the industry with Goldman Sachs, and 2018, Cornide has just one customer dispute that shows up, that was filed in 2018, from which no action resulted and which was subsequently closed.
After an initial period with Goldman, Cornide has continued to employed with UBS from 2004 onwards and operated out of their Coral Gables office in Florida.
The picture, however, changes significantly from 2019 onwards with Cornide having 7 disclosures on his BrokerCheck record at present. All of them are customer disputes with the major claim being about UBS YES and its sale based on misrepresentation, despite being unsuitable for their requirements and investment profile.
UBS YES Explained
The UBS YES program deploys what is known as the ‘iron condor’ strategy and involves a web of puts and call spreads on stocks that are a part of the S&P 500. It is perhaps relatively easy to get clients to agree to, as it does not require additional funds and leverages the equity in his account. That is where the term ‘options overlay’ used for the strategy perhaps comes from.
Options trading is known to be speculative and risky. While there are gains that could be realized, there are equally downside risks as well. It appears that the product was marketed as a reasonable means for additional gains for high net worth investors with little downside risk. Unfortunately, many investors who signed up for it lost significant amounts.
It is easy to highlight the possible gains while downplaying the risks, which is what appears to be the main complaint against UBS and its representatives. The lure is obvious – higher commission earnings.
With a better understanding of the product, perhaps after incurring losses, clients are complaining that the risks involved in this strategy were not disclosed before their consent was obtained. Whether UBS considered individual investor investment goals and financial profiles before making these recommendations is also being questioned.
Investor Recovery Options For UBS YES Investors
Investors losing money in the scheme may be able to recover losses arising from this product through FINRA, which runs a non-judicial arbitration process pertaining to securities-related disputes between clients and brokerage firms, and advisors. The process is generally faster than a judicial process and awards have rarely been overturned by courts.
Our expert team of attorneys, that has extensive experience in financial and securities disputes and frauds, as a result of their work at the Securities and Exchange Commissions (SEC), as counsel for brokerage firms, and as defense attorneys on Wall Street, are available to support you through this journey.
You can reach us at 800-856-3352 and maximize your recovery opportunity through our experienced investor lawyers, already supporting other investors in similar claims.