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FINRA Arbitration Panel In Florida Holds UBS Financial Services Liable For More Than $1.7 Million In Investor Losses

On February 2nd, 2022, the FINRA arbitration panel in Boca Raton, Florida issued a decision in a securities fraud dispute—awarding more than $1.7 million in damages to three interconnected investment entities (Case Number: 20-00459). The respondent in the case was UBS Financial Services Inc. (CRD#: 8174/SEC#: 801-7163,8-16267), the Swiss-based multinational investment bank that is licensed to operate in 53 U.S. states and territories. In this article, our Miami unsuitable investment losses attorney discusses the findings and decision of the Florida FINRA arbitration panel.

Statement of Claim: Unsuitable Investments, Negligence, Misrepresentation 

In order to initiate FINRA arbitration proceedings, an investor must file a Statement of Claim. A Statement of Claim is effectively a complaint. It is an opportunity for a wronged investor to lay out their cases, explaining the allegations in detail. In this case, the group of interconnected investment entities raised a number of different causes of action against UBS Financial Services, including:

  • Brokerage firm negligence;
  • Material misrepresentations;
  • Material omissions of facts;
  • Unsuitable investment recommendations; and
  • Breach of fiduciary duty.

Allegations: Losses Caused By Failed Yield Enhancement Strategy (YES)

Notably, the underlying cause of action in this FINRA arbitration claim is related to losses stemming from the Yield Enhancement Strategy (YES). Over the past several years, a number of different FINRA arbitration claims have been filed for similar reasons. UBS Financial Services and other large broker-dealers touted the YES strategy as a way for investors to make a safe, above market return on their investment holdings.

The strategy centered on investors purchasing many related investment options. As long as the securities in question traded within a relatively narrow range during a short-term period, the investor would pick up a small premium. However, if there was major market volatility, the investor would be at risk of huge losses. In December of 2018, a sudden uptick in stock market volatility caused sharp losses for many YES strategy investors. 

FINRA Arbitration Decision: UBS Financial Services Liability for More than $1.7 Million 

Many investors filed claims based on their Yield Enhancement Strategy (YES) losses because they argued that they were not properly informed of the risk. They alleged that the strategy was fundamentally unsuitable for their needs. Brokers and broker-dealers have a duty to make suitable investment recommendations to clients.

In this case, the FINRA arbitration panel determined that the YES losses amounted to a breach of the securities industry suitability rule. As such, UBS Financial Services was held liable for a significant share of the losses—more than $1.7 million in total.

Schedule a Confidential Consultation With a FINRA Arbitration Attorney in Miami, Florida

At ​Carlson & Associates, P.A., our Florida securities fraud lawyers have extensive experience advocating for investors in FINRA arbitration claims. If you are preparing to file an arbitration claim against a broker or broker-dealer, we are available to help. Call us today for a completely private review of your case. We provide advocacy to investors in Miami, South Florida, and regions beyond.




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