UBS Financial Services Inc. was dealt a setback last week in the latest dispute involving the firm’s Yield Enhancement Strategy (YES), according to InvestmentNews.
A Financial Industry Regulatory Authority panel of arbitrators ordered UBS to pay $1.18 million to three investors who filed an arbitration claim in December 2020 over the managed-account options strategy. Claimants Rick and Pamela McCormick and the Lindsay McCormick 2013 Gift Trust lost approximately $1.2 million on their YES investments. They accused UBS of breach of fiduciary duty, negligence, negligent supervision, fraud, breach of contract, violation of sections 10(b) of the Securities Exchange Act and Rule 10b-5 of the Securities & Exchange Commission, and violation of the Texas Securities Act.
The three-member public panel of FINRA arbitrators ordered UBS to pay $900,000 in compensatory damages, including $450,000 to Rick and Pamela McCormick and $450,000 to the trust. In addition, UBS will pay $56,718 in costs, as well as $225,000 for the claimants’ attorneys’ fees.
The latest award comes on the heels of another ruling last month in which a FINRA arbitration panel awarded $3.86 million to a Houston couple, who claimed that the YES strategy exposed them to unacceptable risk.
The strategy has been the subject of numerous customer complaints since its inception in 2015. According to InvestmentNews, 33 disputes have gone to arbitration with UBS winning 17 of the cases and clients who filed claims winning 16.
At Lewitas Hyman, 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 Lewitas Hyman at (312) 291-4600 or through our online contact form.