A panel of arbitrators sided with a UBS Wealth Management broker in a dispute over the firm’s “Yield Enhancement Strategy” (YES), a managed-account options strategy product that was the subject of numerous complaints by clients.
In its arbitration award, the three-person panel said that industry veteran Russell A. Rabito can erase from his public BrokerCheck record a $195,000 settlement and allegations of unsuitable recommendations.
Dozens of complaints against UBS over the YES strategy were brought to arbitration, and the firm agreed to pay a $25 million settlement after the Securities and Exchange Commission filed fraud charges against the firm over the strategy. The SEC found that UBS marketed and sold YES to about 600 investors despite not giving its financial advisors adequate training and oversight in the investment plan.
In Rabito’s case, customers sought damages based on their investment losses after YES experienced steep losses in 2018 and 2020. But the arbitrators said he had done due diligence before recommending the strategy and proactively met with customers as YES was declining.
“The documents and testimony overall show that [Rabito] put forth a yeoman’s effort to learn all he could about the investment and share it with Claimants,” the panel wrote.
The $195,000 lost by the customers represented just 10% of their total $2 million investment in YES. The arbitrators noted that the customers’ complaint named UBS and not Rabito, and that the customers were not opposed to the expungement from his record.
The attorneys at Hyman Cotter PC have considerable experience with FINRA’s procedures for expunging false, defamatory and erroneous disclosures from a registered representative’s record. This experience includes seeking expungement in existing FINRA customer and employment arbitrations, as well as filing separate FINRA arbitrations for the sole purpose of seeking expungement. If you have any concerns about problematic disclosures on your CRD record or those that are viewable on FINRA’s Broker Check portal, contact Hyman Cotter PC at 312-291-4600 or through our online contact form for a free consultation.
