UBS Ordered to Pay $90,000 to Yield Enhancement Strategy Customer

On December 22, 2020, a FINRA Dispute Resolution Services arbitration panel in Boca Raton, Florida, ordered UBS Financial Services, Inc. to pay a customer $89,675 in compensatory damages.  After considering the pleadings, the testimony and evidence presented at the hearing, the arbitration panel concluded that the UBS Yield Enhancement Strategy (“YES”) was not suitable for the investor, Gerald S. Backman, a retired partner at corporate law firm Weil Gotshal & Manges.

Many UBS customers, including wealthy and sophisticated investors, who invested in UBS’s Yield Enhancement Strategy have filed lawsuits against UBS in the form of FINRA arbitrations to recover financial losses.   The customers have claimed that the strategy was not suitable for them and that UBS materially misrepresented and omitted the product’s risks.

Investors who have suffered investment losses due to UBS’s Yield Enhancement Strategy should contact experienced securities arbitration attorneys at Iorio Altamirano LLP for a free and confidential case evaluation.  Partner August Iorio, who has been investigating YES for nearly two years, can be reached at or toll-free at (855) 430-4010.

UBS’s Yield Enhancement Strategy

UBS’s Yield Enhancement Strategy, or YES, is a complex managed options strategy that UBS marketed as a safe, market-neutral overlay that would provide incremental returns to an investor’s portfolio.

UBS brokers sold this product to customers across the country.  It is believed that nearly 1,500 customers chose to follow their financial advisors’ recommendations and implement this strategy.  The strategy reportedly had approximately $6 billion assets under management.

Unfortunately, many UBS financial advisors did not adequately understand the product and failed to disclose the risk associated with YES.  Investors have complained that they were misled and that their financial advisors never discussed the downside risk associated with implementing the strategy.

The strategy, which involved the use of several options trades and borrowing, has sustained significant losses when the stock and bond markets saw an increase in volatility beginning in early 2018. It is believed that investors have suffered at least $75 million in losses, likely significantly more.

This blog has previously written about YES: UBS Profits Double as Investors in UBS’s Yield Enhancement Strategy Suffer Losses

The Arbitration Award –  FINRA Case No. 19-00522

The Claimant in FINRA Case No. 19-00522 was Gerald S. Backman, as Trustee of the Gerald S. Backman 2007 Revocable Trust.   According to reports, Mr. Backman is a retired partner at corporate law firm Weil Gotshal & Manges.

Mr. Backman brought a FINRA arbitration claim against UBS Financial Services, Inc. asserting the following causes of action:  constructive fraud, negligent misrepresentation; omissions; breach of fiduciary duty; breach of contract; unsuitability; and failure to supervise.  The causes of action related to Mr. Backman’s investment in UBS’s Yield Enhancement Strategy.  Mr. Backman sought “compensatory damages in an amount sufficient to compensate Claimant for the financial injury caused by UBS’s conduct and omissions,” among other damages.

UBS denied all claims and requested that the Panel expunge the record of Scott Rosenberg, one of YES’s portfolio managers, and Mark Zeller, presumably, Mr. Backer’s financial advisor.

The arbitration panel found UBS liable for unsuitability and ordered it to pay Mr. Backman $89,675 in compensatory damages.  The arbitration also denied UBS’s request to expunge the record of Mr. Rosenberg and Mr. Zeller.

This was the first YES arbitration case decided to date in which an investor won a monetary award.  UBS has prevailed in other FINRA arbitrations, including an arbitration brought by Richard and Barbara Brody.  Mr. and Mrs. Brody were represented by Zamansky LLC.  Prior arbitration awards are not binding on other FINRA arbitration proceedings.

UBS Yield Enhancement Strategy:  How to Recover Losses

When an investor suffers investment losses due to misconduct by a financial advisor or broker-dealer, the investor can file a securities arbitration claim against their financial advisor and/or broker-dealer in an effort to be compensated. The case will be presented and defended in a FINRA arbitration proceeding to a panel of arbitrators.

Securities arbitration is a unique and complex practice area. Investors should seek out experienced counsel who can navigate the arbitration process and effectively advocate on their behalf.

Iorio Altamirano LLP is a securities arbitration law firm located in the heart of New York City. Iorio Altamirano LLP represents investors nationwide who have suffered investment losses due to securities fraud.

We have nearly 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1000 cases.

If you suffered losses from investing in UBS’s Yield Enhancement Strategy, contact New York securities arbitration lawyer August Iorio of Iorio Altamirano LLP. August Iorio can be reached at or toll-free at (855) 430-4010 for a free and confidential review of your account.

Iorio Altamirano LLP is a bilingual law firm, fluent in both English and Spanish.

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