Did your Broker recommend an Investment in Harvest Collateral Yield Enhancement Strategy (CYES)?  

The White Law Group continues to investigate potential securities fraud claims involving Harvest Collateral Yield Enhancement Strategy (CYES), an options-based investment strategy.  

CYES is an investment strategy marketed and sold by several brokerage firms including Merrill Lynch, Morgan Stanley and JP Morgan that targeted high income investors and was touted as a market-neutral strategy and a “safe” investment. Unfortunately for many investors, this resulted in huge losses in highly volatile markets.  

The CYES strategy, similar to the UBS YES (Yield Enhancement Strategy), involves margining investors’ conservative stock or bond portfolios to invest in “Iron Condor” options trading structures managed by a third-party investment advisory firm, Harvest Volatility Management. Iron Condor is a popular trading strategy that involves a pair of options “spreads.”  

The strategy includes a broker selling call or put options to enhance returns in relatively stable or flat markets. Options or derivatives are only suitable for the most sophisticated investors. They are extremely complex and risky to begin with, but market turbulence has led to catastrophic losses for many investors.  

In June we reported that UBS Financial Services Inc settled with the SEC for $25 million in connection with the YES, (Yield Enhancement Strategy) See: UBS Settles Fraud Charges over YES Options Trading Strategy  

According to the SEC’s order, between February 2016 through February 2017 UBS marketed and sold YES to approximately 600 investors through its platform of domestic financial advisors. The order finds that, during this time, UBS didn’t provide its financial advisors with adequate training and oversight in the strategy, and although UBS recognized and documented the possibility of significant risk in YES investments, it failed to share this data with advisors or clients.    

Recovery of Investment Losses in Harvest Collateral Yield Enhancement Strategy (CYES)   

Broker dealers are required to perform adequate due diligence on any investment they recommend. They must ensure that all recommendations are suitable for the investor. Recommendations should be in line with the investor’s age, risk tolerance, net worth, and investment experience.  

It is possible that some financial advisors may have recommended this type of investment because of the high commissions associated with their sale and creation.  

If you have suffered losses investing in Harvest Collateral Yield Enhancement Strategy (CYES), please contact the securities attorneys at The White Law Group.  For a free consultation, please call the offices at 888-637-5510.  

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.  

For more information on The White Law Group, and its representation of investors, please visit www.WhiteSecuritiesLaw.com.