The law firm of Oakes & Fosher is currently investigating securities broker Scott Rosenberg for possible negligence and/or misconduct. Scott Rosenberg is a New York based securities broker. He has worked in the securities industry for twenty-one years. During his career, he has been registered with three different securities firms.

Registrations

  • Donaldson, Lufkin & Jenrette Securities Corporation (1997-2003)
  • Credit Suisse Securities (2003-2015)
  • UBS Financial Services (2015-Present)

The Yield Enhancement Strategy

According to his publicly available FINRA BrokerCheck report, Scott Rosenberg has received multiple customer complaints over the course of 2019 concerning what is known as the Yield Enhancement Strategy. This strategy, also known as the YES strategy, is a highly unsuitable trading strategy that securities brokers at UBS Financial Services presented to investors as low risk with high returns. In reality, this strategy is anything but low risk.

UBS Financial Services securities brokers, like Scott Rosenberg, marketed this strategy to unsuspecting investors as a way garnering consistent returns without having to expose their principal investment to substantial risks. However, many of these UBS brokers left out the crucial detail that these promised consistent returns were dependent on market stability.

To break it down, the securities broker convinces the investor to purchase a short option. This means that there is a separate party involved that has purchased the long option. With options trading, the purchaser of the long option pays the purchaser of the short option a previously decided upon premium for taking on the risk. The owner of the short option then grants the owner of the long option the right to either purchase or sell the securities, depending on whether it is a ‘call’ or ‘put’ option, at the agreed upon strike price despite what they may actually be valued at by the option’s expiration date.

The Yield Enhancement Strategy proves to be highly successful under stable market conditions. This is because when the market values do not change, the owner of the short option does not lose money, as the previously agreed upon strike price has not changed from the current market value. However, if the market value has drastically increased or decreased from the previously agreed upon strike price, depending on whether it was a ‘call’ or ‘put’ option, the owner of the short option can now owe the owner of the long option a substantial amount. The amount they owe depends on how much the value changed. Many UBS Financial Services brokers, like Scott Rosenberg, omitted this detail when pitching the Yield Enhancement Strategy to customers.

Allegations

  • In February 2019, an attorney, on behalf of a customer, alleged unsuitability and misrepresentation concerning Scott Rosenberg’s recommendation of the YES strategy. This case is currently pending. The customer is seeking $400,000 in damages.
  • In June 2019, an attorney, on behalf of a customer, alleged unsuitability and misrepresentation concerning the YES strategy. This case is currently pending. The customer is seeking $6 million in damages.
  • Also in June 2019, an attorney, on behalf of a customer, alleged unsuitability and misrepresentation concerning the Yield Enhancement Strategy. This case is currently pending. The customer is seeking $100 million in damages.

What Does This Mean?

UBS Financial Services’ Yield Enhancement Strategy was highly unsuitable for investors with modest investment objectives. UBS brokers, like Scott Rosenberg, allegedly used market stability to disguise the premiums paid by the owners of the long options as consistent returns for investors. It is impossible to implement this strategy without significant risk to the investor, and it this piece of information that is usually left out when implementing this strategy.

Oakes & Fosher Can Help

Many Investors are still unaware of the legal recourse available to them after losing money due to securities broker negligence or misconduct. Investors who have lost money investing in the Yield Enhancement Strategy, or any similar strategies, may 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 Scott Rosenberg, or UBS Financial’s Yield Enhancement Strategy, please contact Oakes & Fosher for a free and private consultation.