UBS Financial Services was ordered to pay over $5 million to a Florida couple in the latest arbitration case involving the firm’s Yield Enhancement Strategy (YES), Financial Advisor reports.
A three-member Financial Industry Regulatory Authority arbitration panel issued the award recently to George and Sandra Schussel for losses they incurred from investing in the YES options product. It was reported to be one of the largest awards yet among the numerous claims filed over the complex strategy.
The Schussels were originally seeking $6.5 million in the case. Their statement of claim asserted numerous causes of action, including fraud, misrepresentation, unsuitability, unsuitable product, breach of fiduciary duty, negligence, and breach of contract under federal securities laws.
FINRA’s arbitrators awarded the couple $5,028,412 in compensatory damages, $94,679 in pre-judgment interest and $91,939 in costs. Attorneys for the couple alleged that clients have lost nearly $1 billion over the last four years due to YES. They claimed the strategy was so complex that it was not fully understood by the advisors recommending it, resulting in a breach of fiduciary duty.
Of the over three dozen FINRA arbitration claims brought by YES investors, about half have gone in the favor of UBS with a dismissal, and about half have resulted in awards for the investors.
In June, UBS agreed to pay $25 million to settle fraud charges filed by the Securities and Exchange Commission over the YES strategy.
The SEC found that UBS marketed and sold YES to about 600 investors from February 2016 to February 2017, but did not provide its financial advisors with adequate training and oversight in the product. The SEC said that UBS recognized the investments posed a significant risk and had documentation to that effect, but did not share that information with advisors or clients.
At Hyman Cotter PC, our attorneys have handled hundreds of arbitrations before FINRA, the Chicago Board Options Exchange (CBOE), the Chicago Board of Trade (CBOT), JAMS, the American Arbitration Association (AAA) and other self-regulatory organizations nationwide. We have also appeared in courts throughout the United States in various types of securities-related matters. For more information about our arbitration and litigation services, please contact Hyman Cotter PC at 312-291-4600 or through our online contact form.
