The Swiss bank conceived a product intended to shield its American clients from market storms. Instead, clients accuse UBS of causing losses – and they stand a good chance of prevailing.
A UBS-devised product called an yield enhancement strategy – or YES – was meant to help wealthy clients to ride out swings in financial markets more smoothly. Instead, at least two dozen of them accuse the Zurich-based wealth manager of incurring more than $60 million in losses, according to «The Wall Street Journal» (behind paywall).
The clients are seeking recompense from UBS, arguing they weren't adequately informed of the risks attached to the products. One former client said she was told by her broker in UBS' Avenue of the Americas offices in New York that «If the world came to an end tomorrow, you’d be the only one with any money left,» she recounted to the U.S. outlet.
Clients' Good Record
In fact, she lost $750,000 on a $3 million investment. A spokeswoman for UBS told the outlet that clients who invested confirmed in writing that they were aware they could lose money, and that only a fraction of YES clients had filed arbitration claims in the U.S. over it. Those who did file claims stand a relatively good chance of prevailing, if recent history is anything to go by.
Disgruntled clients of UBS have a better rate of winning their claims from the Swiss bank vs top American brokerages, the newspaper reported. In addition, UBS was cited in the U.S. at least nine times since 2009 – often over claims from individual investors who claimed damages from sophisticated and complex products.
