UBS Financial Services, Inc. Fraud and/or Investment Loss Customer Complaint Disclosures

UBS Financial Services, Inc.: (CRD#: 8174/SEC#: 801-7163, 8-16267)

This firm was formerly UBS Paine Webber Inc. and changed its name in June 2003. The company was founded in 1879 and is based in Weehawken, New Jersey. UBS Financial Services Inc. operates as a subsidiary of UBS Americas, Inc. It currently employs 19,620 people. The UBS stands for Union Bank of Switzerland.

UBS Financial Services Inc., is licensed in 53 States and Territories and has over 50 offices worldwide. Its total assets in 2018 were $958.48 billion, with a net income of $4.10 billion and total equity of $52.92 billion.

ETRACS ETN Investment Loss Recovery

Losing money on the stock market or through investing is not uncommon, but your stockbroker, financial advisor, or brokerage firm should never be responsible, directly or indirectly, for your losses.  One investment loss that seems to have significantly impacted many investors are ETRACS ETNs, particularly those sold by UBS Financial Services, Inc. which began in late February 2020.  Continue reading to learn more about what ETRACS ETNs are, the volatility of the stock market in Spring 2020, and how you could recover your investment losses with the help of a qualified stockbroker negligence lawyer at Wolper Law Firm. 

What Are ETRACS ETNs?

ETRACS ETNs (Exchange Traded Notes) are senior, unsecured, unsubordinated debt securities that track the total return of a certain market index. If this sounds confusing to you, that’s because it is. ETRACS ETNs are a particularly risky and complex investment that can result in substantial losses to investors, even when investors are aware of the risk. The problem is that many financial advisors fail to disclose these risks to investors, and instead describe them as likely to generate big returns without fully informing the investor of just how risky they are. But what makes ETRACS ETNs so risky? The truth is, they are internally leveraged. This means that the investment vehicle borrows money to purchase additional securities. This can enhance the returns of the ETRACS ETNs or magnify the losses during a down market. In the spring of 2020, when the stock market crashed and the coronavirus pandemic took its toll on not only the U.S., but the entire world, margin calls were issued everywhere, causing investors to endure considerable losses when they were unable to increase the value of their portfolios.  Within the ETRACS ETNs, those investments experienced internal margin calls and were required to liquidate securities within the collateral portfolio to satisfy the call. This grossly depreciated the asset base and, in turn, the value of the ETNs. In March 2020, UBS Financial Services, Inc. decided to redeem outstanding notes of several of their offered ETRACS ETNs, including 

• Monthly Pay 2xLeveraged US Small Cap High Dividend ETN
• Pay 2xLeveraged Mortgage REIT ETN, tickers MORL and MRRL
• ProShares Daily 3x Long Crude ETN linked to the Bloomberg WTI Crude Oil Subindex ER (WTIU)
• VelocitySharesTM 1X Long VSTOXX Futures ETN (EVIX)
• VelocitySharesTM 1X Daily Inverse VSTOXX Futures ETN (EXIV)

This occurred because the indicative value of these securities plummeted to under the $5 minimum value. There are many more ETRACS ETNs that are subject to redemption which can be found here. Because ETRACS ETNs are only suitable for investors who are able to tolerate aggressive and speculative risk, you may be entitled to financial recovery through an arbitration complaint. 

Get Help Recovering Your ETRACS ETN Investment Losses

If you purchased ETRACS ETNs from UBS Financial Services, Inc. and endured considerable losses due to your broker’s misconduct, contact a dedicated investment loss lawyer at Wolper Law Firm. You can schedule a free, no-obligation consultation by filling out the online contact form provided below or giving our office a call at 800.931.8452.

INVESTOR UPDATE—Recovery Options For Investors Who Lost Money In The UBS Yield Enhancement Strategy (“YES”)

As previously reported, The Wolper Law Firm is currently investigating potential claims against UBS Financial Services, Inc. in relation to its marketing and implementation of an options based “Yield Enhancement Strategy”, or “YES,” in customer accounts.

What is the UBS Yield Enhancement Strategy?

The UBS Yield Enhancement Strategy is an options strategy that was marketed by UBS as a safe method to generate supplemental portfolio income.  The UBS Yield Enhancement Strategy involves the use of an “Iron Condor” options strategy, which entails selling both near-the money and out-of-the money put and call options against the S&P 500 index, NASDAQ and other primary indices.  In a stabilized market environment, some or all of the options will expire and the investor collects the premiums.  Conversely, in a volatile market, the premiums associated with the options positions will spike, creating margin calls, closure of options positions at a loss and/or the exercise of the underlying options. 

How did the UBS Yield Enhancement Strategy Cause Investor Losses?

The premium value of an option is determined by (1) time (i.e., maturity) and the (2) strike price.  If the option has a shorter maturity, there is theoretically less time for an investor to navigate short-term volatility, leading to more pronounced swings in the market value of the option.  Conversely, if the option has a longer maturity and the options are further out-of-the-money, short-term volatility may not cause significant changes in the market value of the option. 

In 2018, the financial markets experienced extreme volatility.  In January 2018, the S&P 500 was at 2,800.  Throughout 2018, there were violent fluctuations in the S&P 500, which reached highs of 2,929 and a low of 2,350.  The most volatile period was between October and December 2018 during which the market declined 20% followed by a rebound of 12% through January 2019.  These violent swings caused the premiums of both the put and call side of the iron condor strategy to spike, leading to losses on both sides of the trade. 

How did UBS market the UBS Yield Enhancement Strategy?

In today’s current interest rate environment, it has been difficult for investors to identify short-term, fixed income investments that generate a stable, predictable income stream.  In the absence of such opportunities, many UBS Financial Advisors pitched the UBS Yield Enhancement Strategy as a safe method to generate portfolio income.  UBS Financial Advisors represented to customers that the strategy was properly hedged such that even if there were market movements, the investor’s principal was protected.  In other words, the UBS Yield Enhancement Strategy was represented to be a relatively conservative investment strategy.

How do I know if I have a claim to recover my investment losses in the UBS Yield Enhancement Strategy?

Financial advisors have a legal and regulatory obligation to recommend only suitable investments and investment strategies that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients.  To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.  

If your Financial Advisor failed to disclose the risks associated with the UBS Yield Enhancement Strategy, or otherwise “soft-peddled” the risks, this may provide the factual basis for a claim of misrepresentation, omission or breach of fiduciary duty. 

If you are an investor in the UBS Yield Enhancement Strategy, and are looking for an attorney to evaluate your legal options, contact the securities litigation and arbitration attorneys at the Wolper Law Firm, P.A.  The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities.  Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters.  We can be reached at 800.931.8452 or by email at mwolper@wolperlawfirm.com.

INVESTOR ALERT—Recovery Options For Investors Who Lost Money In The UBS Yield Enhancement Strategy (“YES”)

The Wolper Law Firm is currently investigating potential claims against UBS Financial Services, Inc. in relation to its marketing and implementation of an options based “Yield Enhancement Strategy”, or “YES,” in customer accounts.

What is the UBS Yield Enhancement Strategy?

The UBS Yield Enhancement Strategy is an options strategy that was marketed by UBS as a safe method to generate supplemental portfolio income.  The UBS Yield Enhancement Strategy involves the use of an “Iron Condor” options strategy, which entails selling both near-the money and out-of-the money put and call options against the S&P 500 index.  In a stabilized market environment, some or all of the options will expire and the investor collects the premiums. 

Conversely, in a volatile market, which we have experienced in recent months, the options get exercised.  If the options get exercised and the strategy is not properly hedged, investors may experience substantial portfolio losses.  In addition, because the iron condor strategy involves leverage and short options positions, the losses become amplified. 

How did UBS market the UBS Yield Enhancement Strategy?

In today’s current interest rate environment, it has been difficult for investors to identify short-term, fixed income investments that generate a stable, predictable income stream.  In the absence of such opportunities, many UBS Financial Advisors pitched the UBS Yield Enhancement Strategy as a safe method to generate portfolio income in substitution of traditional strategies.  UBS Financial Advisors represented to customers that the strategy was properly hedged such that even if there were market movements, the investor’s principal was protected.  In other words, the UBS Yield Enhancement Strategy was represented to be a relatively conservative investment strategy.

How do I know if I have a claim to recover my investment losses in the UBS Yield Enhancement Strategy?

Financial advisors have a legal and regulatory obligation to recommend only suitable investments and investment strategies that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients.  To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.  

If your Financial Advisor failed to disclose the risks associated with the UBS Yield Enhancement Strategy, or otherwise “soft-peddled” the risks, this may provide the factual basis for a claim of misrepresentation, omission or breach of fiduciary duty. 

If you are an investor in the UBS Yield Enhancement Strategy, and are looking for an attorney to evaluate your legal options, contact the securities litigation and arbitration attorneys at the Wolper Law Firm, P.A. for a free consultation.

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities.  Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters.  We can be reached at 800.931.8452 or by email at mwolper@wolperlawfirm.com.

Investment Loss Recovery Options For Investors In UBS ETRACS Exchange Traded Notes

The Wolper Law Firm is currently investigating UBS Financial Services, Inc.’s sale of ETRACS Exchange Traded Notes, or “ETRACS ETNs” after clients suffered devastating losses in February and March 2020. ETRACS ETNs are senior, unsecured, unsubordinated debt securities that are designed to track the total return of a specific market index. Most of the ETRACS ETNs are highly leveraged and, thus, deemed speculative investments. With the increased market volatility in February and March 2020, many of UBS’ ETRACS ETNs were unable to withstand the price movements and have been forced to liquidate, causing massive investor losses. On March 13, 2020, UBS announced that all outstanding notes of the Monthly Pay 2xLeveraged US Small Cap High Dividend ETN due February 6, 2045 (Ticker: SMHD) would be mandatorily redeemed as a result of the occurrence of an “Acceleration Upon Minimum Indicative Value,” triggered as a result of the indicative value of the securities being less than $5.00 on March 12, 2020. On March 19, 2020, UBS announced that it was redeeming two more ETRACS ETNs—the Pay 2xLeveraged Mortgage REIT ETN, tickers MORL and MRRL, after the notes fell below a $5 minimum share value. These particular ETRACS ETNs were correlated to the mortgage real estate investment trust (Mortgage REIT) industry, which are essentially leveraged bond or loan funds that invest primarily in real estate debt. The Mortgage REIT industry also experienced precipitous declines in March 2020. On March 20, 2020, UBS announced redemptions of three additional ETRACS ETNs—the ProShares Daily 3x Long Crude ETN linked to the Bloomberg WTI Crude Oil Subindex ER (WTIU), VelocitySharesTM 1X Long VSTOXX Futures ETN (EVIX), and VelocitySharesTM 1X Daily Inverse VSTOXX Futures ETN (EXIV). For a link to UBS’ press releases on these redemptions, click https://etracs.ubs.com/whats-new/press-releases In addition, many other ETRACS ETNs are subject to redemption, including: • ETRACS Monthly Pay 2x Leveraged MSCI US REIT INDEX ETN (LRET) • ETRACS Monthly Pay 2x Leveraged Alerian MLP Infrastructure Index ETN (MLPQ) • ETRACS Monthly Reset 2x Leveraged ISE Exclusively Homebuilders ETN (HOML) • ETRACS Monthly Pay 2x Leveraged S&P MLP Index ETN Series B (MLPZ) • ETRACS Monthly Pay 2x Leveraged Wells Fargo MLP Ex-Energy ETN (LMLP) • ETRACS Monthly Pay 2x Leveraged Wells Fargo MLP Ex-Energy (LMLB) • ETRACS ProShares Daily 3x Inverse Crude ETN linked to the Bloomberg WTI Crude Oil Subindex (WTID) • ETRACS Monthly Pay 2x Leveraged U.S. High Dividend Low Volatility ETN (HDLV) • ETRACS Monthly Pay 2x Leveraged US Small Cap High Dividend ETN (SMHD) • ETRACS Monthly Pay 2x Leveraged US Small Cap High Dividend (SMHB) • ETRACS Monthly Pay 2x Leveraged Diversified High Income ETN (DVHL) • ETRACS Monthly Pay 2x Leveraged Closed-End Fund ETN (CEFL) • ETRACS Monthly Pay 2x Leveraged Closed-End Fund ETN (CEFZ) • ETRACS 2x Leveraged Long Wells Fargo Business Development Company Index ETN (BDCL) • ETRACS 2x Leveraged Long Wells Fargo Business Development Company ETN (LBDC) ETRACS ETNs are only suitable for investors with an aggressive or speculative risk tolerance. Financial Advisors have a regulatory obligation to fully disclosue all material risks associated with a recommended investment or investment strategy, including the impact that leverage can have on the overall performance of the investment strategy. Failure to make full disclosure constitutes a breach of duty.

See UBS Financial Services, Inc. Individual Broker Complaints by following the links below:

-Fired UBS Financial Advisor, Nicolas Barrios, Barred By FINRA After Investigation Into Whether He Committed Fraud
– FINRA Fines And Suspends UBS Financial Advisor, Richard D. Niemann, For Exercising Discretion In Customer Accounts Without Authorization
– UBS Broker, Dwight West, Has Pending Customer Complaint, Alleging Unsuitable Recommendations To An Elderly Client
– INVESTOR ALERT—UBS Financial Services Broker, Alex Herrera, Barred By FINRA For Allegedly Selling Away

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at mwolper@wolperlawfirm.com.

SEC Sanctions Multiple Brokerage Firms Over Text Messaging And WhatsApp

UBS Financial Services, Inc. and UBS Securities LLC — “From at least January 2018 to September 2021, UBS employees sent and received off-channel communications that related to the business of the broker-dealer operated by UBS. Respondents did not maintain or preserve the substantial majority of these written communications. Respondents’ failure was firm-wide, and involved employees at all levels of authority. As a result, UBS violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder.” For a copy of the SEC sanction, click here.

Full list of SEC Sanctions over Text Messaging and WhatsApp here.