FINRA arbitrators rule UBS must pay clients $1.4 million over YES investment strategy

On Behalf of | Jun 2, 2022 | FINRA Compliance

A panel of Financial Industry Regulatory Authority arbitrators sided with The David and Heather Weir Family Trust in their dispute with UBS Financial Services, ThinkAdvisor reports.

The case involved UBS’s Yield Enhancement Strategy, a managed-account options strategy product that has been the subject of numerous complaints by clients.

In the latest claim, the family trust said the strategy was unsuitable for their risk tolerance and investment objectives. They asserted causes of action that included fraud; misrepresentation; unsuitable product; breach of fiduciary duty; negligence; failure to supervise; and breach of contract under the federal securities laws.

The three-member panel of FINRA arbitrators awarded the claimants $1.4 million, of which $1.1 million was in the form of compensatory damages. It included $933,092 for out-of-pocket losses and $176,393 in prejudgment interest. The remainder of the sum included costs for expert witness fees and attorneys’ fees.

UBS had asked that the statement of claim be dismissed in its entirety and without prejudice. UBS also asked that the matter be expunged from the Central Registration Depository records of UBS broker William Montgomery Cerf, but that request was denied.

An attorney for The David and Heather Weir Family Trust was quoted as saying that the decision showed that the arbitrators “recognized UBS’s misconduct in the marketing and implementation of the YES strategy.”

UBS was reported to have won 15 of the 29 disputes with clients over the YES strategy so far, while in the other 14, the clients received at least some compensation.

Handling financial services disputes requires counsel with a significant understanding of the industry, the laws, rules and regulations that impact our clients and the forums in which disputes are adjudicated. At Lewitas Hyman, our attorneys’ unparalleled litigation experience comes from leveraging their industry-specific knowledge developed from working at firms such as Morgan Stanley, UBS Financial Services and EVEREN Securities, serving as outside counsel for some of the world’s largest law firms, and through prior affiliations with the SEC. For more information about our securities arbitration and litigation services, please contact Lewitas Hyman at (312) 291-4600 or through our online contact form.

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