Articles Posted in Securities Fraud in the Media

The investment fraud lawyers at Rich, Intelisano & Katz (“RIK”) won $3.2 million for their clients, Bret and Marion Pearlman, in a recent FINRA arbitration against UBS.  The Pearlmans’ claim was for misrepresentations and omissions related to UBS’s Yield Enhancement Strategy (YES) – an options overlay strategy.  It is the third largest award against UBS related to YES.  Investors have tried to a final award approximately 46 YES cases against UBS and have won roughly one-half of those cases.  RIK has tried only two cases to a final award and won the largest award ($5.2 million) and the third largest one.  In both cases, the awards reflected over 90% of the clients’ losses as of the date of the filing of the arbitration.  Read the full award here.

Options overlay strategies use underlying assets, such as equities, cash, and bonds, as collateral to buy and sell options.  In its most basic understanding, UBS’s options overlay strategy, YES, periodically bought and sold options, simultaneously, to generate income from the sale of options.  In many cases, YES was pitched and marketed to UBS customers as a “low-risk” strategy that seeks to enhance portfolios approximately 2-6% of their mandate annually (the mandate is the underlying amount of collateral the customers elect to use for the strategy).  YES was further marketed as having limited to no correlation to the S&P 500.  Additionally, in its materials and disclosures, UBS stated that the managers of the program utilized various methods to “limit” risk exposure.  In reality, YES was a high-risk strategy that added significant risk to the underlying assets where potential losses were awfully disproportionate to any potential gains.  The additional risks and potential losses were never fully disclosed to many customers.

RIK’s securities attorneys have represented many investors of YES and other complicated options strategies in legal actions against UBS and other firms.  If you have losses related to YES or options trading strategies, do not hesitate and feel free to schedule an appointment here or call us at (212) 684-0300 for a free consultation.

The investment fraud attorneys at Rich, Intelisano & Katz won a $5.2 million FINRA arbitration award for their clients, George and Sandra Schussel, in a case relating to UBS’s Yield Enhancement Strategy (“YES”).  Investors in YES, including the Schussels, suffered significant losses in December 2018.  Many investors in YES have since filed FINRA claims against UBS.  To date, over 40 of the filed claims have gone to award – approximately half have been in favor of investors while half favored UBS.  RIK has been successful in representing multiple YES investors.  The September 15, 2022 award of $5.2 million represents the largest YES-related award against UBS to date and an approximately 95% recovery for our clients.  Read the full award here.

During the Schussels’ arbitration, RIK’s attorneys stressed that recommending a strategy that the advisor did not fully understand is inherently a breach of their fiduciary duty.  After eight days of hearings, the panel unanimously awarded the Schussels over $5,200,000 including $95,000 in pre-judgment interest and $92,000 in costs.  The significant award has received the following press coverage: FA-mag, Barron’s, and InvestmentNews.

UBS’s YES strategy is an options overlay strategy which uses investors’ conservative investments as collateral for iron condor options trading.  UBS’s financial advisors marketed it as a moderate risk strategy designed to gain additional incremental investment income.  Despite UBS’s disclosure statements, UBS never adequately disclosed the true risks of YES – that it was a high risk, low reward strategy.  As such, investors in YES, including the Schussels, were shocked to discover significant losses in their YES accounts in December 2018.

Annuities are insurance contracts that make routine payments to customers either immediately or at some point in the future.  This insurance contract allows investors to protect and grow their retirement savings while providing them with guaranteed income.  Some brokers and financial advisors recommend selling or exchanging annuities for “better” investment opportunities.  However, liquidating or exchanging an annuity comes with a high price– commissions, tax implications, and the loss of benefits associated with the original annuity.  For these reasons, liquidating or exchanging an annuity without very clear financial reasons may be  unsuitable for customers.  The securities fraud lawyers at Rich, Intelisano & Katz, LLP (RIK) have recovered millions for investors who suffered from annuity-related losses.

When investors sell or exchange their annuities, it comes with a heavy price.  First, when customers sell their annuity, they are subjected to costly fees and penalties.  For example, the customer may incur surrender charges and high cancellation fees.  Second, customers will lose all benefits associated with the annuity, such as legacy protection which is a death benefit to help provide a legacy for your loved ones.  Third, the customer forfeits expected benefits from the annuity– the customer will no longer have guaranteed income.  Fourth, taxes may become immediately due on the proceeds.  Lastly, there are often high commissions associated with the sale of annuities.

Regardless of the costs and losses associated with selling or exchanging annuities, brokers and financial advisors sometimes recommend such actions to customers in order to generate commissions for themselves.  Essentially, liquidating or exchanging annuities could potentially be a scheme for your broker or advisor to take money out of your savings and put it into their pocket.  What’s worse is that the broker or advisor will use your money from the sale of the annuity to purchase another annuity or other investment products further increasing commissions and fees.  Just like with any scheme to take advantage of customers, this is ill-suited and exceedingly improper.

Below is an American Lawyer piece which explains our clients’ pending $383 million FINRA arbitration against Citigroup. It goes on to talk about how there are more and more large and complex cases at FINRA. It’s true. As partner John Rich points out at the end of the article, our firm is involved in other multi-million dollar matters at FINRA. In fact, we handled the Bayou v. Goldman FINRA arbitration case which generated a $20.6 million award, and is mentioned in the article. We think FINRA arbitration will continue to attract sophisticated legal disputes because it is more efficient and timely than court litigation.

Too Big for Their Britches?

Nate Raymond

Below is Bloomberg piece about our client’s $383 million FINRA arbitration claim against Citigroup Global Markets, Inc. related to hedge funds, private equity, and derivatives.


Citigroup Saudi Deal Haunts Pandit By Donal Griffin – Nov 30, 2011

I couldn’t fight it any more. I started tweeting on securities fraud a few weeks ago. Here is the link:!/rossbi – Basically, I’m curating (hipster word alert) news stories related to Wall Street with a little comment layered over it. Have found it very helpful to follow breaking news and long form stories related to the Street via Twitter. Over-tweeting frustrates me – similar to people who talk too much. Take a look if you’re interested.

New York Super Lawyers, a publication of The New York Times Magazine, has named Ross B. Intelisano as one of New York’s top Securities Litigation attorneys in their 2010 publication. The list of Super Lawyers recognizes lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement in their respective fields. Super Lawyers’ selection process is a vigorous multi-phase rating process based on peer nominations and evaluations, combined with third-party research. Their selection process has been recognized by bar associations and courts across the country.

Ross Intelisano is the only attorney on the 2010 New York Super Lawyers top Securities Litigation list who primarily represents institutional and individual investors in securities arbitration.

I’m often asked what I read on a regular basis regarding securities and investment fraud. Back in the day (say, pre-Enron), there was limited print and online coverage of investment misconduct. In fact, when I told people what I did for a living, some would actually question whether our niche practice was even viable, “you mean there’s fraud going on on Wall Street?” Ah, how the world has changed. First Sam Israel, then the Bear Stearns High Grade Funds, and finally, the big whale of the Bernie Madoff affair.

Now, financial fraud news is general business news. Just look how Vanity Fair has scored huge every month with one strong financial story after another (Madoff, Fairfield Greenwich, Marc Dreier, Goldman Sachs and Morgan Stanley survival, etc.). Here is a little a look at what I’m presently reading, for better or worse. Today, I’ll focus on newspapers.

I start with the Financial Times. Worldly, smart, a cut above the rest for global coverage of finance. I particularly like Gillian Tett’s column and Greg Farrell’s Street coverage. I read the NY Times business section (mostly because it’s attached to the Sports section, but that’s a whole other issue). Gretchen Morgenson, Jenny Anderson, and newly appointed wonder kid Andrew Ross Sorkin, are all strong. No one covers investor protection better than Gretchen. And I love Ben Stein. However, it’s too bad the Times won’t throw more resources at its Street coverage. I also read the Wall Street Journal daily, especially on breaking finance news issues. Kate Kelley’s coverage of Bear Stearns collapse was award winning stuff. When the Journal sends its entire squadron on a topic, no one can top its finance coverage. I used to read the Post’s coverage but since Roddy Boyd left, it’s not as interesting.

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