UBS Yield Enhancement Strategy Lawsuit (FINRA) Filed By Investors For Losses

UBS Yield Enhancement Strategy Lawsuit

The UBS Yield Enhancement Strategy (UBS YES) is an investment strategy that aims to boost returns by selling options. However, this strategy can also lead to significant losses if the underlying security moves in the wrong direction.

The Yield Enhancement Strategy (UBS YES), introduced by UBS Financial Services in 2015, was touted as an allegedly conservative options trading (iron condor strategy) options trading plan providing diversification in addition to consistent, incremental gains with low yield.

The entire idea would be that a UBS client could make a tiny return while safeguarding their existing portfolio. The company’s agents promoted YES as a limited-risk option to conventional investment tactics.

Due to the huge losses in the UBS Yes program, many investors alleged investment fraud as they did not know about the risks associated with the yield enhancement strategies. Financial advisors are supposed to disclose all the risks associated with investments.

When a consumer borrowed against their holdings at the company to deal with options, they invested in UBS YES, similar to carrying out a margin loan versus their existing holdings. It was intended to increase yields without placing the underlying securities at undue risk. The target market for UBS YES was wealthy individuals with a net value of at least $5 million. Interestingly, 2018 saw YES holdings rise to over $6 billion.

Did you invest in UBS YES? Call us today at 1-800-856-3352 or use our contact form to send us your name email and phone number and one of our investment fraud attorneys will call you. You can also email your phone number to [email protected]

What are UBS Yield Enhancement Strategy Risks

Surprisingly UBS YES’ risks were much more relative to what investors were told. Despite markets being good, the exposure to risk for the investors was significant. This is because the investment strategy involves the assumption of low volatility. It should be used by only very sophisticated investors, however, many brokerage firms marketed it to retail investors.

Nevertheless, once the turbulence materialized, the losses incurred by these clients were significantly more significant than what brokers had misled them to expect. Despite the tiny yields of perhaps 4%, the threat ratio was utterly incorrect. As a result, it could take time for investors to recoup substantial losses based on this rate of return.

Surprisingly the company’s brokers even touted UBS YES as a means of earning additional retirement income. However, given the volatility and unreliability of this strategy, it was unwise to recommend the product to clients having this objective in mind.

Most UBS YES investors we have talked to contend that the brokers and financial advisors misrepresented the product to them. Notably, investors had hoped to create income irrespective of market conditions. Instead, YES exposed them to losses, especially when the market was volatile.

Examples include 2018, when the S&P 500 dropped 4.4%, with UBS YES losing 18%. Surprisingly the company falsely called it a “black swan” situation and that clients were to get their money back. Additionally, in 2019 despite the S&P gaining 31.5%, UBS YES dropped 2%, and in 2020 because of the pandemic-induced volatility UBS YES was down 15.5%.

UBS YES Yield Enhancement Strategy Uses Iron Condor Strategy

The iron condor tactic from UBS YES used four unique options contracts. Every contract should use a different exercise price even if they all have similar expiration dates. The options leveraged the S&P 500 Index futures.

Selling both calls and puts simultaneously results in profit. By simultaneously acquiring puts and calls, the hedging element was built. The options trades’ security is the client’s total portfolio.

The “Iron Condor”: An Even More Expensive Type of Yield Enhancement Strategy

Although the company made almost $100 million yearly, it lost over $1 billion in investors’ savings. The firm charged around 1.75% in annual fees for the client’s YES borrowings, irrespective of the amount of capital used by UBS. Surprisingly the amount doesn’t include underlying management fees. The costs led to UBS and its financial consultants making around $100 million annually.

The losses are estimated to have surpassed $1 billion. For instance, following the program’s collapse in December 2018, a broker-dealer lost close to $700 million of clients” money.

Recovering Losses Through FINRA Arbitrations

FINRA arbitration, established in 1944 to help individual investors recover fraudulent losses, is an alternative to suing in court. It requires both parties to arbitrate a dispute in an individual arbitration in a public forum, and the process is public.

In order to recover your fraudulent losses from your broker or brokerage firm, you must prove: (i) that your losses are the result of misrepresentation, (ii) that your losses are the result of fraud, and (iii) that you will be able to recover the fraudulent loss.

The best way to find out if you can recover investment losses is to contact an investment fraud attorney.

How Options Work in Investing

In investing, options are a derivative instrument. A derivative instrument is a financial product whose value is derived from, based on, or linked to the value of an underlying asset.

Options are contracts where, in exchange for payment, we agree to buy or sell an asset (usually a stock) at a certain price within a set amount of time.

A call option gives the buyer the right to buy the underlying asset before a specified date (known as the expiry date). The right must be exercised within a certain period of time (usually 30 days) after purchase. A put option gives the buyer the right to sell the underlying asset before a specified date (known as the expiry date).

The right must be exercised within a certain period (usually 30 days) after purchase. Options are traded on an exchange, such as the New York Stock Exchange (NYSE) where the trade is registered with central clearing and settlement.

Understanding The Risks of “Yield Enhancement Strategy” or “YES” Strategy Investing

The “YES” strategy definition is a “Yield enhancement strategy” or “YES” strategy which involves the purchase of all the available in-the-money (ITTM) and out-the-money (OOTM) in a particular position in a specified range.

While this is an even simpler form compared with the more complex “NEGATIVE” strategy (which is an even more complicated form compared with the simpler “YES” and “NOT”), the simplest form is often the most straightforward and easy- to- grasp. For purposes of FINRA arbitration, the simplest form of the YES strategy is known as the “NEGATIVE” form.

Collateral Yield Enhancement Strategy (CYES) Investment Fraud

A “collateral yield enhancement strategy” is a form of YES strategy involving the acquisition of a portfolio of iron condor investments, typically at a time when there is little or no market volatility, in order to earn a profit when the underlying market fluctuates.

Investor Recovery Options for UBS Yes Strategy (Yield enhancement strategy) UBS Financial Services Inc

Investors in the program have lost more than 20% of their investment. For wealthy investors, the losses can even be eight figures. Investors that lost money in the UBS YES program should contact

It is vital to note that this type of case requires a skilled securities attorney with the knowledge, experience, and resources to represent wealthy investors and other investors versus big Wall Street firms.

Our firm specializes in investment fraud and has recovered millions for investors and a 98% success rate.

Investors should reach us by calling 1-800-856-3352 or online and receive a free consultation with UBS Yield Enhancement Strategy attorneys. Haselkorn & Thibaut represents clients from across the nation.


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