Strategy incorrectly described as low risk, led to losses for claimant — $299,599.05 verdict

Type of action: Securities fraud, negligence, breach of fiduciary duty

Injuries alleged: Investment account losses of $437,398.57

Name of case: Amyx, Trustee v. UBS Financial Services Inc.

Court: Financial Industry Regulatory Authority (FINRA) Arbitration

Case no.: 20-02555

Name of judge or mediator: FINRA Arbitration Panel

Date resolved: 12/28/2021

Verdict or settlement: Verdict

Amount: $299,599.05

Attorney for plaintiff (and city): W. Scott Greco, McLean

Description of case:  This FINRA arbitration was filed seeking damages suffered in a complex options trading program at UBS known as YES, or Yield Enhancement Strategy, which was recommended to the claimant. YES was an actively managed overlay strategy which traded using margin on existing accounts, and allegedly utilized non-directional options spreads known as Iron Condors. At the arbitration hearing, the financial advisor admitted that he incorrectly believed the strategy to be low risk, and incorrectly described it as such to the claimant. The strategy was in fact high risk and resulted in large losses in many high-net-worth customer accounts in 2018 and 2019, including the claimant’s. Claimant further presented expert witness testimony that the marketing material for YES was misleading, that the strategy was directional and the strategy was highly correlated at times to the equity markets. In additional to damages and costs, the arbitration award included attorneys’ fees under the Virginia Securities Act, Va. Code § 13.1-522.

W. Scott Greco, counsel for the claimant, provided case’s information.