According to BrokerCheck records financial advisor Scott Rosenberg (Rosenberg), currently employed by UBS Financial Services, Inc. (UBS) has been subject to at least three customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Rosenberg’s customer complaints allege that Rosenberg recommended unsuitable investments in what appears to be UBS’ Yield Enhancement Strategy (YES).
UBS created and advertised YES as an option-based trading strategy that sought to increase returns for investors. UBS brokers are alleged to have advertised the Yield Enhancement Strategy as involving trading call or put options to try and accomplish increased returns in their portfolios. Investors were often presented with slide presentation which advertised the Yield Enhancement program. The slide deck represents that the YES strategy has “limited correlation with the market or a single stock position, the YES Strategy may provide portfolio diversification.” The strategy also claims to use upside and downside protection to prepare for “unexpectedly volatile market conditions” and that the options strategies are designed to limit risk.
However, yield enhancement strategies are risky because any opportunity to profit relies on stock market stability – an impossible long-term scenario. When a stock index, such as the commonly used S&P 500, remains within a certain range the strategy can profit because the options purchased expire without reaching their strike prices. The investor earns a return from the option premiums.
The UBS YES program is alleged to have included the Iron Condor options trading strategy. The iron condor is an options strategy structure where investors write two short near money options and purchase two long out-of-the money options. While the YES strategy was marketed as a way to seek additional returns many investors instead suffered significant losses and margin calls instead.
In March 2019 a customer filed a complaint alleging that Rosenberg violated the securities laws by investing the clients’ assets from March 2018 to November 2018 in a misrepresented strategy that makes money because it works like an insurance product and takes advantage of the difference in implied and realized volatility. The claim is currently pending.
In February 2019 a customer filed a complaint alleging that Rosenberg violated the securities laws by investing the clients’ assets unsuitability and making misrepresentations regarding an options overlay strategy investment. The claim is currently pending and alleges $400,000 in damages.
Brokers are required under the securities laws to treat their clients fairly. This obligation includes the duties to disclose material risks of the investments they recommend and to present products, particularly complex or confusing products, in a fair and balanced manner that allows the client to evaluate the recommendation. Another important obligation advisors have is to make only suitable recommendations for investments to the client.
Rosenberg entered the securities industry in 1997. From January 2003 until December 2015 Rosenberg was registered with Credit Suisse Securities (USA) LLC. Since November 2015 Rosenberg has been associated with UBS out of the firm’s New York, New York office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.