If you sustained significant losses or were a conservative or moderate investor recommended the UBS Yield Enhancement System (YES), please call 303-300-5022 for a free and confidential consultation.
UBS brokers marketed the Yield Enhancement Strategy, or YES, to wealthy clients. During times of low market volatility the strategy generated positive returns, but it racked up losses in 2018 and 2020 when market gyrations picked up. Because the program used borrowed money, known as leverage, investors had to either add additional money when trades went south or sell their positions at a loss.
UBS limited participation in the program to investors with a net worth of $5 million but that does not mean the recommendation was suitable or that an appropriate percentage of an investor’s portfolio was invested in YES.
Investors seeking yield often seek a conservative income strategy. The yield strategy utilized by UBS in YES was highly speculative and always contained a high risk of loss.
Securities brokerages have a duty to recommend only suitable investments. This includes investments consistent with the objectives and risk tolerance of an investor. The wealth of an individual does not absolve a brokerage from making suitable recommendations.
FINRA has further has called into question the suitability of complex investments used in accounts of unsophisticated investors. YES was highly complicated and utilized a system that only the most sophisticated investors would understand. This, in and of itself, makes the strategy unsuitable for most investors.
The strategy utilizes the trading of options secured by the investors holdings. Option trading is an area of high risk. Despite the risk, the strategy is being implemented with investors who want either moderate or low risk.
Such suitability violations gives investors recourse for loss recovery. Jeffrey Pederson is an attorney located in Denver, Colorado who has represented investors nationwide in suitability suits against securities brokers and brokerages. Representations are generally on a contingency basis.