Today, UBS Group AG announced that its net profit almost doubled in the third quarter to nearly $2.1 billion from $1.05 billion from a year earlier.
Meanwhile, as UBS and other large investment banking firms continue to rake in huge profits, UBS’s Yield Enhancement Strategy investors continue to suffer avoidable losses.
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.
Many of these aggrieved investors have filed lawsuits against UBS in the form of FINRA arbitrations claiming that the strategy was not suitable for them and that UBS materially misrepresented and omitted the risks associated with the product.
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 can be reached at email@example.com or toll-free at (855) 430-4010.