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Finra Arb Panel Rules for UBS in Complex Investment Dispute

By Alex Padalka November 24, 2020

UBS has won a Finra arbitration claim brought against the firm in relation to a complex investment strategy designed in-house.

Richard and Barbara Brody filed a claim against UBS in March 2019, alleging fraud, misrepresentation, unsuitability and breach of fiduciary duty related to UBS’ Yield Enhancement Strategy offering, Finra says in an arbitration award document published last week.

UBS’ YES uses several option trades at different strike prices but with the same expiration dates and was designed to limit exposure during market volatility, as reported. Lawyers for UBS investors have said the strategy resulted in at least $60 million in losses to clients after portfolio managers promoted the strategy to advisors.

In their claim, the Brodies requested over $950,000 in total damages, including compensatory damages in the amount of more than $482,000, realized capital losses of approximately $17,000, and disgorgement of YES fees and interest to the tune of around $69,000, as well as pre-judgement interest, lawyers and experts’ fees of more than $307,000 and other costs and expenses and unspecified punitive damages, Finra says.

Last week, a Finra arbitration panel denied the Brodies’ claims in their entirety. The panel also assessed around $19,000 in hearing session fees to the investors and around $3,000 to UBS, the industry’s self-regulator says.

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Tags:  Regulatory/legal issues , Investment strategies , UBS

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