The law firm of Oakes & Fosher is currently investigating securities broker Matthew Buchsbaum’s potential involvement in what is known as the Yield Enhancement Strategy–also known as the YES strategy. According to his publicly available FINRA BrokerCheck report, Matthew Buchsbaum, received multiple complaints throughout 2019 in connection with the YES strategy.

Matthew Buchsbaum is currently working as a New York based securities broker. He has worked in the securities industry for twenty-seven years. During his career, he was registered with four different securities firms.

His Registrations 

  • A.G. Edwards & Sons (1992-1999)
  • Donaldson, Lufkin & Jenrette Securities Corporation (1999-2003)
  • Credit Suisse Securities (2003-2015)
  • UBS Financial Services (2015-Present)

The Yield Enhancement Strategy

It is Matthew Buchsbaum’s present registration with UBS Financial Services that got him involved with the YES strategy. This strategy was marketed to investors by UBS Financial Services’ brokers as a way to receive consistent returns without opening up their principal investments to substantial risks. For obvious reasons, a low risk/high yield investment strategy is incredibly alluring to potential investors. However, the truth of the matter is that the Yield Enhancement Strategy is one of the riskiest investment strategies plaguing the market right now.

Options trading can be incredibly complex. UBS brokers relied on this complexity to misrepresent this strategy as low-risk to unsophisticated investors. Options trading involves two parties betting against each other of whether a specific security will increase or decrease in value. These two parties are either in the long or the short positions. UBS pitched the YES strategy for investors to be in the short position. When writing an option, there is both an agreed upon strike price and expiration date. The individual in the short position takes on the risk as they give the party in the long position the right to either sell or buy the securities at the agreed upon strike price–depending on whether it was a call or put option. This is to be done on or before the expiration date. Because the party in the short position is taking on the risk, they received a premium from the party in the long position.

The way UBS brokers, like Matthew Buchsbaum, were able to convince investors that this was a safe investment strategy with consistent returns is by taking advantage of market stability. When the value of a security remains unchanged throughout the life of an option, then the individual in the short position does not owe any money. The premium they received from the party in the long position is disguised by the broker as a consistent return on their investment. However, when the market becomes more volatile, investors can the begin to lose significant amounts of money. If the market value of the security in a call option increases significantly, or decreases in a put option, then the party in the short position can now owe a substantial amount of money to the party in the long position–dependent on how much the market value has changed.

The Allegations 

  • In March 2019, an attorney, on behalf of a customer, alleged excessive trading and misrepresentation against Matthew Buchsbaum concerning the Yield Enhancement Strategy. This case is currently pending. The customer is seeking $1 million in damages.
  • In April 2019, an attorney, on behalf of a customer, alleged unsuitability and misrepresentation against Matthew Buchsbaum concerning the YES strategy. This case is currently pending. The customer is seeking $10 million in damages.
  • In June 2019, an attorney, on behalf of a customer, alleged unsuitability and misrepresentation in connection with the Yield Enhancement Strategy. This case is currently pending. The customer is seeking $100 million in damages.

These were just some of the claims filed against UBS Financial Services for Matthew Buchsbaum’s alleged involvement with the Yield Enhancement Strategy.

What Does This Mean?

The Yield Enhancement Strategy was an incredibly risky and unsuitable trading strategy which was contrary to investors with modest investment objectives. Matthew Buchsbaum allegedly recommended this strategy to multiple customers without having a reasonable basis to believe it was suitable for them. He also allegedly misrepresented the crucial details about the strategy that would most likely have helped his customers discern the true risks associated with the strategy.

Oakes & Fosher Can Help

Many investors are still unaware of the legal recourse available to them after losing money due securities broker misconduct or negligence. Investors who have lost money while invested in the Yield Enhancement Strategy might be entitled to damages. Oakes & Fosher dedicates its entire legal practice to helping investors across the nation. If you, or someone you know, have lost money investing with Matthew Buchsbaum, or with the Yield Enhancement Strategy, please contact Oakes & Fosher for a free and private consultation.