Articles Posted in UBS

Chicago-based Stoltmann Law Offices represents clients who’ve suffered losses as a result of unsuitable and speculative trading recommendations and strategies. If a broker recommends an awful securities trade – and you lose money – is the broker legally liable? Under rules that govern the conduct of securities brokers and financial advisors through FINRA, the prime U.S. securities regulator, if the trades they recommend are unsuitable, unauthorized, or a part of a larger scheme to defraud,  the answer is a resounding “yes”.

A UBS Financial Advisor who promoted to clients the idea of “short-selling” shares of Tesla (symbol TSLA) stock in 2019 and 2020, is accused of multiple violations in a FINRA complaint, according to AdvisorHub.com.

The broker, Andrew Burish, a 38-year industry veteran, recommended shorting Tesla stock, that is, making money on the stock price if it declines.  The problem is, during the relevant time period, Tesla stock price went through the roof  “triggering more than $23 million in losses for four couples—all members of an extended family—and another investor,” according to an arbitration claim filed with FINRA.

Chicago-based Stoltmann Law Offices in investigating cases where brokers have been treated unfairly by their firms.  A growing issue for financial advisors is when they are pushed out of their firms or treated unfairly simply for getting older. When this happens, brokers can file age discrimination lawsuits against their former employers.

Judith Bovitz, a 70-year-old financial advisor with Wells Fargo, sued her employer last year for age and gender discrimination. She claimed Wells retaliated against her by transferring her to a smaller branch office when she complained that younger, male advisors were being assigned more lucrative accounts, according to Reuters. She had a $100 million book of business at the time of the lawsuit. Bovitz spent her 34-year career at Wells and its Prudential Securities predecessor. “I’ve lost hundreds of thousands of dollars a year because other advisors were given accounts,” Bovitz told Advisorhub.com. “I’m sick and tired of being passed over.” The company said it is “reviewing” Bovitz’s allegations.

In 2011, Wells Fargo Advisors, the wealth management unit of Wells Fargo & Co. agreed to pay $32 million to settle a gender bias class-action suit with about 3,000 women advisors. The women claimed that compared with their male advisor counterparts, female advisors were “provided fewer business opportunities by the company. The women also claimed that female advisors were impaired by limited career advancement, work assignments and distribution of accounts,” one of the ways firms chose to shift customers to younger, male advisors.

Chicago-based Stoltmann Law Offices continues to represent investors who’ve suffered losses in connection with financial advisors who have oversold energy stocks and other energy-related investments. With the COVID-19 pandemic depressing demand for everything from gasoline to jet fuel, it’s been a mostly rotten year for energy stocks. In fact, when news first hit the markets in early March, stocks in many oil & gas companies and funds that invested in them crashed. At one time, the Energy Select SPDR (XLE), an exchange-traded fund that invests in energy companies, was down as much as 58%.

The net effect of tens of millions of Americans sheltering in place, avoiding travel and not commuting slashed demand for fuels. Only a handful of people were getting on jets, buses, ships, trains, or driving to work. That resulted in energy companies eliminating dividends and losing money.  While the economy has recovered somewhat as more states have re-opened in recent months, energy demand is nowhere near where it was at the beginning of 2020. The U.S. economy is now in a recession, which may continue into 2021.

What is important to realize about oil/gas prices is, the decline in energy demand actually began a few years ago – primary energy consumption dropped by half in 2019 alone — hasn’t stopped brokers from selling investments in oil & gas companies. They have sold stocks, limited partnerships, and mutual funds that concentrate in fossil fuels, which are volatile commodities and have a long history or volatility.

Chicago-based Stoltmann Law Offices continues to investigate investor claims related to UBS YES products.  In recent years, with savings yields at rock bottom, investors have been eager to attempt to safely earn a higher return on their money. Wall Street has responded with so-called “yield enhancement strategies” (YES) designed to pump up returns. But these strategies eek out this extra yield by employing extremely risky options trading strategies.

What brokers haven’t told investors in countless pitches, however, is that yield enhancement products are complicated and carry numerous hidden risks. The UBS YES program, involving an “iron condor” options trading plan, has attracted a great deal of attention recently. Investors are suing UBS, the Swiss wealth management firm, claiming they lost money when UBS brokers enrolled them in the strategy. Arbitration claims against the company have also been filed with FINRA, the securities industry regulator.

Investors who invested in the UBS YES program claim they suffered losses, even though the firm claimed the strategy was “conservative” and “low risk,” according to Wealthmanagement.com. What investors apparently were not told is how complex and convoluted the YES strategy was:

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from dealing with unscrupulous financial advisors selling municipal bonds and municipal bond funds

One of the most prominent trouble spots for investors have been mutual funds and single bonds issued by Puerto Rico, which was slammed by a long-standing debt crisis in recent years in addition to a devastating hurricane and breakdown of its infrastructure.  The island’s government, which issued the bonds, filed for bankruptcy, which triggered a negotiation with bondholders to negotiate its outstanding debt. That meant that bondholders will receive pennies on the dollar. A deal reached earlier this year slashed $8 billion in debts by 40%, according to Bloomberg News.

To date, the Puerto Rican collapse is the largest governmental bankruptcy in U.S. history, involving $129 billion in debts, reports The New York Times. The crisis was first noticed in 2012, when Moody’s downgraded the island’s bonds to near-junk status, which sunk prices of those debt securities. Since the bonds carried constitutional guarantees, investors were led to believe that they were secure. The bankruptcy was triggered since the island’s government was unable to pay back its debts. Investors, who were not fully informed of the fiscal debacle early on, got burned.

Stoltmann Law Offices has previously alerted consumers that their brokerage firms can be held responsible for theft in their brokerage, bank, or cryptocurrency accounts as a result of hacking. We have been successful in recovering these losses from brokerage firms for our clients. That is because the regulations are very clear on the supervision and compliance procedures that these firms must execute to protect their clients and their hard-earned savings.

FINRA Rule 3110 requires brokerage firms to establish and maintain a supervisory system to achieve compliance with applicable securities laws and regulations. Included in this supervisory system is the requirement to safeguard customer funds and securities and to inspect the “transmittals of funds (e.g., wires or checks, etc.) or securities from customers to third party accounts; from customer accounts to outside entities (e.g. banks, investment companies, etc.)…” (FINRA Rule 3110(c)(2)(A)).

Firms are further required to comply with the Gramm-Leach-Bliley Act Safeguards Rule (Regulation S-P) and the Identity Theft Red Flags Rule (Regulation S-ID). Pursuant to Regulation S-ID, this includes having an Identity Theft Prevention Program with procedures to identify, detect, and respond to red flags of identity theft. 17 CFR §248.201(d).

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from risky municipal bonds. One of the most troubling investments for investors has been bond mutual funds and single municipal bonds issued by Caribbean territories like Puerto Rico. The island was devastated by Hurricane Maria and a debt crisis. The island’s government, which issued billions in municipal bonds, filed for bankruptcy, which forced bondholders to take losses. Like Puerto Rico, the neighboring Virgin Islands may be facing a debt meltdown of its own.

The U.S. Virgin Islands, also severely damaged by two hurricanes in recent years, is also dealing with an ongoing debt crisis. With only about 100,000 inhabitants spanning three Caribbean Islands, the U.S. protectorate had been issuing high-yield municipal bonds in recent years to fund essential government services such as a power utility. The government owes more than $6.5 billion to creditors, which averages some $19,000 per resident. In addition, the islands have billions in unfunded pension and healthcare obligations. That’s one of the highest per-capita debt loads in the Western Hemisphere.

The debt explosion in the Virgin Islands has gone from bad to worse. Three years ago, credit ratings agencies slashed the ratings on government bonds to junk status. While that made the bonds’ yields more attractive (they rose), it also indicated a higher risk of default. As a result, prices on those issues dropped.

Stoltmann Law Offices has brought arbitration claims against dozens of brokerage firms like Ameriprise Financial, Merrill Lynch, Morgan Stanley, Wells Fargo, and JP Morgan Securities involving the unsuitable recommendations for investors to invest in oil and gas related securities.  In 2014 and 2015, we represented dozens of investors against various firms involving Master Limited Partnerships, or MLPs, which are almost always related to the oil and gas industry.  Then, during a big drop in the price of oil, a lot of oil and gas companies went into bankruptcy, dragging a lot of investor money with them.  History is repeating itself.

The price of oil has completely tanked in the last month. Even before the COVID-19 pandemic, the price of oil was being pressured by a price war involving Saudi Arabia, Russia, and OPEC.  Combined with the broad-based ongoing market crash, oil and gas investments – which are inextricably linked to the price of oil – have suffered catastrophic losses.  There are some well-know names on this list:

Goldman Sachs MLP and Energy Renaissance Fund – GER: Year to Date has dropped from 4.37 to 0.68 per share

If you are interested in suing UBS in a class action lawsuit, the attorneys at Stoltmann Law Offices may be able to help. Every year, UBS gets sued dozens of times in class actions lawsuits, for various violations of state and federal securities laws. UBS, like most other brokerage firms, has a binding arbitration clause in every new account agreement that means that for most claims, if you would like to sue UBS, it must be done through the binding arbitration process, and not in the class action process. There are some avenues through which the brokerage firm can be sued in a class action lawsuit. For example, securities fraud issues where UBS is the underwriter. If you would like to file a class action lawsuit claim against UBS, please call us at 312-332-4200 today.

Stoltmann Law Offices is investigating Royce O. Simpson. He entered into a Letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA). Allegedly, Simpson failed to provide written notice to his member firm of his outside business activities regarding a gold mining operation in Ghana, Africa. FINRA fined him $15,000 and suspended him from associating with any firm for eight months.

Mr. Simpson was registered with: Dover Group, First Ohio Securities Company, Shearson Lehman Hutton Inc., Rotan Mosle Inc., Painewebber Inc., HSBC Securities, Rodman & Renshaw Inc., Everen Securities, J.C. Bradford, UBS Financial Services and Oppenheimer & Co. in Houston, Texas from November 2011 until February 2014. He has two customer disputes against him, and is not currently registered with any FINRA member firm.

If you wish to sue Royce O. Simpson, please call us at 312-332-4200 to speak to an attorney about your options. The call is free with no obligation. We sue firms such as Oppenheimer & Co. for failing to properly supervise their employees.

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