Investors lost millions in UBS’s high-risk Yield Enhancement Strategy (“YES”). Despite UBS’s claims that this was a low-risk strategy and that losses were protected by hedging put and call options, investors had substantial losses when the S&P dropped in 2018 and 2019. Even with these losses, UBS brokers continued to push this strategy onto investors. Because of market volatility in early 2020, losses ensued further, causing investors to lose millions. RIK’s investment fraud lawyers represent several claimants in multimillion-dollar FINRA arbitrations against UBS on behalf of YES investors.
Investors who suffered losses from the YES strategy began to file claims against UBS as early as February 2019. Due to the coronavirus, FINRA arbitrations were conducted by videoconference for most of 2020 and 2021 (read more about FINRA Arbitrations During the Covid-19 Pandemic here). As a result, several YES investors had their arbitration hearings held remotely. Holding a remote hearing presents a variety of challenges and hurdles for investors. Three of the most significant difficulties for a claimant to overcome in a remote hearing are gaining credibility with the arbitrators, earning sympathy, and conducting an effective cross examination of respondent witnesses.
Credibility is based on the competence of the witness and determines whether their testimony is worthy of belief. In many cases, once the panel decides which witnesses are credible and which are not, the question of right and wrong is easily reached. Panels determine credibility, in part, by observing and examining how witnesses and attorneys react to a lawyer’s questioning. When a hearing is conducted through a two-dimensional platform, like videoconferencing, the ability to effectively and fully observe witness and attorney reactions is lost.