According to BrokerCheck records financial advisor Mark Zeller (Zeller), currently employed by UBS Financial Services, Inc. (UBS) has been subject to at least two customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), one of Zeller’s customer complaints allege that Zeller recommended unsuitable investments in what appears to be UBS’ Yield Enhancement Strategy (YES). The YES strategy was incredibly risky and may have been misrepresented by brokers to when sold to their clients.
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 stategy 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.