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FINRA arbitrators hold UBS liable for nearly $1.9 million over YES investment product

On Behalf of | Feb 22, 2022 | FINRA Compliance

A Financial Industry Regulatory Authority arbitration panel has ruled against UBS Financial in a case involving its investment strategy known as Yield Enhancement Strategy (YES), Financial Advisor reports.

Two trusts named for the late Irving Siegel filed the claim against UBS, alleging there had been fraud, negligence and misrepresentation by the firm in what it had promised clients for the YES strategy. The attorney representing the Siegel trusts, Jeffrey Kaplan, said his clients had invested $8.5 million in the product. He said UBS had told them to expect a 2% to 3% market increase per year when the YES product actually lost 25%.

The attorney was quoted as saying that UBS had marketed the strategy as “a market neutral or non-directional options strategy,” that would mean limitations on both gains and losses. Instead, he said the product exposed clients to far greater potential losses than the potential it brought for gains.

The arbitration panel held UBS liable for $1.875 million for damages, interest and attorney’s fees. The trusts’ original claim asked for $2.2 million in compensatory damages. According to the report, UBS has won 14 of 26 arbitration cases brought against it so far over the YES strategy.

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