UBS to Pay $25 Million to Settle SEC Fraud Charges Involving Complex Options Trading Strategy, YES (Yield Enhancement Strategy)

According to The Securities and Exchange Commission on June 29, 2022, UBS Financial Services Inc. has agreed to pay approximately $25 million to settle fraud charges in connection with YES, (Yield Enhancement Strategy), a complex investment strategy. (See: UBS Yield Enhancement Strategy | Securities Investigation) 

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.  

As a result, the regulator finds some of UBS’s advisors didn’t understand the risks and were unable to form a reasonable belief that the advice they provided was in the best interest of their clients. When investors suffered losses, many of them, along with their financial advisors, expressed surprise and closed their YES accounts. 

See: UBS Hit with $1.9 Million in another UBS YES FINRA Suit   

Advisory firms are obligated to “implement appropriate policies and procedures” to ensure all parties have a clear understanding of the risks of complex products, according to the Chief of the Division of Enforcement’s Complex Financial Instruments Unit. Advisors must make suitable recommendations to their clients and complex products such as these can present “unique risks,” according to the regulator.  

UBS consented to the entry of the SEC’s order and without admitting or denying the SEC’s findings, UBS agreed to a cease-and-desist order, a censure, and to pay disgorgement of $5.8 million and prejudgment interest of $1.4 million, which is deemed satisfied by payments made to investors in related arbitration proceedings. UBS also agreed to pay a civil penalty of $17.4 million, which it will undertake to distribute to harmed investors. 

Potential Lawsuits to Recover Financial Losses    

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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 Seattle, Washington. For more information, please visit our website, www.whitesecuritieslaw.com.