The Law Offices of Montgomery G. Griffin Represents Aggrieved Investors

UBS YES and Yield Curve Steepeners

The Law Offices of Montgomery G. Griffin handles arbitration cases involving a wide array of issues and securities.  Many of the types of issues we commonly address on behalf of our investor clients are summarized below. Some of the securities involved in our work are complex products or options programs (often recommended by a broker to supposedly enhance the yield of a portfolio).  Presently, the firm is focusing on UBS YES program losses and Yield Curve Steepener products. Read our blog posts on the problems investors have experienced with the UBS YES program here.  

Yield Curve Steepeners transactions involve a strategy that uses derivatives to attempt to benefit from widening yield differences that occur when the yield curve between two U.S. Treasury bonds of different maturities increases.  This strategy can be effective in certain macroeconomic scenarios in which the price of the longer-term Treasury is driven down. During portions of 2018 and 2019, however, the price of long-term Treasury bonds rose substantially (and their yields, therefore, plummeted).  Consequently, the yield curve narrowed considerably—in fact, at times in 2019, the yield curve between the 2-year Treasury and the 10-year Treasury flattened to the point where it became inverted. The result for investors who had purchased yield curve steepeners on the advice of their financial advisors has been substantial losses.  Contact the Law Offices of Montgomery G. Griffin if you have experienced losses in UBS YES or Yield Curve Steepeners. Attorney Monty Griffin is a former financial advisor with a wealth of experience handling disputes involving many issues and security types.

Common Issues in The Cases We Handle for Aggrieved Investors 

The Law Offices of Montgomery G. Griffin represents investors with respect to a wide variety of broker and financial advisor misconduct, including the following:

  1. Unsuitable Investments.  Brokers and financial advisors have a duty to ensure that each investment they recommend to a client, and each investment strategy they utilize, is suitable for the client, taking into consideration the client’s risk tolerance, investment objectives, and financial circumstances, among other things.  Clients may seek recovery when a broker or financial advisor makes an unsuitable investment recommendation, constructs an unsuitable account, or employs an unsuitable investment strategy.
  2. Breach of Fiduciary Duty.  Financial advisors and, in many cases, brokers owe their clients a fiduciary duty, which at its core means that the financial advisor or broker must act in the best interests of the client and avoid conflicts of interest.  Unfortunately, financial advisors and brokers sometimes breach this duty, giving rise to liability on their part. 
  3. Failure to Warn about the Risks of An Investment or Strategy:  Certain general standards apply to all communications between a financial advisor and his or her customer.  Chief requirements include that communications be fair and balanced, that they provide a sound basis for evaluating the facts in regard to any particular security, and that material risks not be omitted from sales presentations.  The firm has found over the years that a common component in virtually every case is that the broker or financial advisor violated one or more of these chief requirements. See also #6 below. 
  4. Failure to Diversify.  Diversification is an important aspect of risk management for any investment strategy.  A broker or financial advisor’s recommendation of an overly-concentrated investment (for example, advising that the client allocate 20% of his or her portfolio in one stock) or other failure to adequately diversify a client’s investments may be actionable
  5. Underperformance (versus applicable indices).  A key method used to assess the amount of damages in disputes with brokers and financial advisors is by comparing the performance of a client’s investment(s) against an appropriate benchmark, typically an index (like the S&P 500) or blend of indices.  This measure of damages is often referred to as “market-adjusted damages.” If a client’s investment(s) substantially underperform applicable indices, broker or financial advisor misconduct is often present and the client therefore likely has grounds for pursuing damages.  Both the FINRA Arbitrator’s Guide and a cacophony of appellate courts around the country have long held that this is a most appropriate measure of damages with securities fraud cases involving financial advisors.
  6. Fraud (Misrepresentations and Omissions).  A broker or financial advisor has a duty to fully and fairly explain important information, including all material risks of any investment, to a client.  If a broker or financial advisor makes a false statement or simply fails to disclose important information, he or she may very well be liable for fraud.
  7. Financial Elder Abuse.  Senior citizens are among the persons most vulnerable to financial exploitation at the hands of a trusted broker or financial advisor.  As such, they frequently are entitled to special protections. When a broker or financial advisor engages in any financial misconduct with respect to a senior citizen, he or she may be liable for special enhanced damages in addition to ordinary damages
  8. Failure to Warn or Intervene in Cases of Financial Abuse.  Brokers and financial advisors are in a privileged position to detect and observe the risk that an elderly client may be subject to financial abuse at the hands of a third party, such as through fraudulent money transfers, money scams, or the like.  When a financial advisor or broker is faced with “red flag” indications that a client is being financially abused, he or she may have a duty to warn or otherwise protect the client, and the broker or financial advisor may be liable for any failure to take such protective action.
  9. Unauthorized Trading.  A brokerage firm or financial advisor may not do anything with a client’s money that it is not first authorized to do.  Sometimes, particularly with accounts that are being charged on a wrap fee (flat percentage) basis, clients grant the financial advisor or broker discretion to commit transactions without first obtaining the client’s authorization.  But in traditional brokerage accounts where the client pays commissions on each trade, the broker generally must obtain the client’s express approval prior to entering each and every trade. Trading without obtaining that per-trade authorization is considered unauthorized trading and is actionable.  Brokers who engage in unauthorized trading often face stiff consequences with industry regulatory authorities.
  10. Failure to Supervise.  Supervision is a critical and legally required part of any brokerage or financial advisory operation.  A brokerage firm or financial advisor’s failure to adequately supervise activity related to a client is actionable if the failure to supervise causes damages to the client. 
  11. Margin and Other Securities-Backed Lines of Credit.  Borrowing money from a brokerage firm against one’s securities holdings increases the risk of an investor’s portfolio.  If a broker or financial advisor fails to adequately warn a client about these risks, or inappropriately encourages a client to take out a loan against his or her securities holdings, it is misconduct for which the broker or financial advisor can be forced to compensate the customer. 
  12. Excessive Trading (Churning).  In a typical brokerage account, the client incurs commissions or other costs from each “buy” or “sell” transaction.  Therefore, frequent trading can lead to destructive results in an investor’s account. It also can unjustly enrich an unscrupulous broker or financial advisor.  Excessive trading (or “churning”) is among the most heinous forms of misconduct and can entitle clients to significantly enhanced damages against their broker or financial advisor.
  13. Theft and Personal Loans.  Shockingly, brokers and financial advisors sometimes use their position of trust with a client to steal or obtain personal loans from the client.  This is not only usually actionable, but it may also be criminal conduct.
  14. Private Placements.  Private investments are loaded with risks and other problems that can quickly come to light upon public and regulatory inspection.  Additionally, private investment issuers often compensate brokers and financial advisors handsomely for selling private investment to clients.  A client can seek recovery for a broker or financial advisor’s inappropriate recommendation of private investment.
  15. Ponzi Schemes and Pyramid Schemes.  Unfortunately, brokers and financial advisors sometimes introduce unwitting clients to Ponzi schemes and Pyramid schemes, or in extreme cases, even run the Ponzi or Pyramid schemes themselves!  Any involvement of a broker or financial advisor in a fraudulent scheme to which the client falls victim may be actionable.