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South Florida FINRA Arbitration Panel Awards Investor $89,675 in Unsuitable Investment Claim

On December 22nd, 2020, a FINRA arbitration panel in Boca Raton, Florida awarded an investor $89,675 in compensatory damages (Case Number: 19-00522). The respondent in the claim was UBS Financial Services, Inc. (CRD#: 8174/SEC#: 801-7163,8-16267), a national brokerage firm with a main office in Weehawken, New Jersey. In this post, our Miami unsuitable investment attorneys provide a more detailed overview of the FINRA arbitration award.

FINRA Arbitration Award: UBS Financial Services 

The FINRA arbitration claim was filed on behalf of the trustee of a revocable trust. The underlying dispute was related to a complex type of investment strategy called Yield Enhancement Strategy (YES). Notably, during previous market turmoil, the strategy suffered major losses. In the statement of claim submitted to the Boca Raton-based arbitration panel, the investor asserted several specific causes of action, including:

  • Negligent misrepresentation;
  • Omission of material facts;
  • Unsuitable investment recommendations; and
  • Failure to supervise.

After reviewing all of the evidence presented by the parties, the Florida FINRA arbitration panel held the respondent (UBS Financial Services) liable for unsuitability. In doing so, it awarded the investors $89,675.00 in compensatory damages. A small amount of additional financial compensation was also granted to cover fees.

Note: This is not the first time a FINRA arbitration panel has held UBS Financial Services (and other brokerage firms) liable for Yield Enhancement Strategy losses on suitability grounds. The YES strategy is not well understood by most investors, and it sometimes carries a far higher degree of risk than was disclosed by financial advisors. 

Brokers-Dealers Must Make Suitable Investment Recommendations 

The Financial Industry Regulatory Authority’s suitability rule is one of the most important regulations in the securities industry. Under FINRA Rule 2111, brokers and broker-dealers have a legal obligation to make “suitable” recommendations to their customers. In effect, the rule requires registered representatives and their members firms to:

  • Understand the objectives of an investor;
  • Understand the financial position and risk tolerance of an investor;
  • Understand the risks of the proposed investment or the proposed strategy;
  • Ensure that an investor is comfortable with the level of risk; and
  • Devise a strategy that is reasonably appropriate given those constraints.

Brokerage firms may be legally liable for losses caused by unsuitable investments, including specific unsuitable financial products and unsuitable overall trading strategies. If you suffered financial losses because your brokerage firm recommended that you take on more risk than was appropriate, you may be entitled to recover financial compensation through a FINRA arbitration claim or another type of legal action.

Call Our Miami Unsuitable Investment Losses Attorney Today

At ​Carlson & Associates, P.A., our Miami investment fraud lawyers are standing by, ready to protect your rights and help you recover compensation for your illegitimate losses. If you have questions about unsuitable investments, we will get you answers. Call our office now for a strictly confidential consultation. We handle suitability claims throughout South Florida, including in Miami, Miami Beach, Boca Raton, Coral Gables, Fort Lauderdale, West Palm Beach, and Jupiter.


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