UBS Financial Services Broker, Matthew Buchsbaum, Has Nine Pending Complaints, Arising From His Recommendation That Clients Participate In The UBS Yield Enhancement Strategy
Matthew Buchsbaum is a Financial Advisor at UBS Financial Services Corp. in New York, NY and the Senior Portfolio Manager of the UBS Yield Enhancement Strategy. Matthew Buchsbaum entered the securities industry in 1997 and previously worked at DLJ Securities Corp.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), since 2018, Matthew Buchsbaum has been the subject of three customer complaints, arising from the UBS Yield Enhancement Strategy (UBS YES Strategy).
All of the complaints allege “misrepresentation with respect to recommendations to invest in and hold an options overlay strategy.” Alleged damages range from several hundred thousand to $10 million.
For a copy of Matthew Buchsbaum’s CRD, click https://brokercheck.finra.org/individual/summary/2220565#disclosuresSection
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 leveraged, short option 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. 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.
Financial advisors have a legal and regulatory obligation to recommend only suitable investments 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.
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