Erez Law Files Claim for UBS Financial Services Inc. YES Losses by Broker Peter Rukeyser

UBS Financial Services Inc.

Erez Law recently filed a FINRA arbitration against UBS Financial Services Inc. and broker Peter Rukeyser (CRD #2500523) related to UBS Financial Services Inc.’s Yield Enhancement Services (YES) losses

The Erez Law client alleges the following in the newly filed FINRA claim:

The Erez Law clients entrusted UBS Financial Services Inc. and Peter Rukeyser with their investments. Regrettably, it is alleged that he recommended a speculative and unsuitable proprietary investment strategy with unacceptable results. It is alleged that UBS Financial Services Inc. was targeting high net worth investors to whom to sell its proprietary, lucrative, and fatally flawed strategy. 

According to the claim, Peter Rukeyser presented YES to the clients as a means to “provide a nice income stream on top of your existing portfolio returns” that was “uncorrelated with markets.” He further represented to her that YES had an annual return of 6.04% since 2004. 

It is alleged that Peter Rukeyser failed to truly understand the risks and characteristics of YES and in so doing violated the suitability rule. Erez Law alleged that Peter Rukeyser failed to disclose to the clients that YES was a high risk strategy and in no way communicated the accurate level of risk attendant to YES. UBS and Peter Rukeyser allegedly touted YES as employing a “market neutral” options strategy known as an “iron condor,” named for the strategy’s profit/loss diagram. In the case of UBS’s YES, the investor’s profits would also be reduced by the YES advisory fees.  

Additionally, it is alleged that UBS Financial Services Inc.’s marketing materials emphasized that YES purportedly would “manage risk” by hedging and actively monitoring positions. It is also alleged that UBS Financial Services Inc. represented that the strategy sought to generate income through time decay, which was a false and misleading representation as the strategy’s returns were in fact unrelated to time decay. 

Based on his representations and recommendations, the claim alleges that the clients agreed to invest in YES. He recommended and implemented a total of $9 million in mandates at the inception of the YES accounts for the clients.

Contrary to his representations, YES was a high risk and unsuitable leveraged strategy that involved significant risk of loss of principal. By recommending that the clients have an excessively large mandate in YES, the risk to which they were unknowingly exposed was further increased. Additionally, the size of the mandate rendered the recommendation even more unsuitable.  

He allegedly violated the suitability rule by failing to adequately understand or appreciate the YES program’s significant risks. Contrary to UBS Financial Services Inc.’s representations, YES was not a market neutral strategy. 

According to the claim, UBS Financial Services Inc. and Peter Rukeyser were able to generate two revenue streams from the same assets, including a 1.75% annual charge on the YES mandate as well as in connection with the accounts that served as collateral for YES. These two revenue streams from the same assets may be referred to as double dipping, which serve to maximize the firm’s fees at its customer’s expense. 

UBS Financial Services Inc. has closed YES to new investors since November 2018 and they instead steered its clients into option overlay programs run by independent investment managers. Despite recognizing that YES was fatally flawed and not viable, UBS Financial Services Inc. allegedly concealed its decision and the reason for its decision from its existing investors. The claim alleges that neither UBS Financial Services Inc. nor Peter Rukeyser disclosed to the clients that the firm no longer believed that YES was a good investment.  

Peter Rukeyser Customer Complaint

Peter Rukeyser has been a registered representative of UBS Financial Services Inc. in New York, New York since 2009. He has been the subject of one additional customer complaint, according to his CRD report:

August 2019. “Time frame: January 2017 – present Claimant’s counsel alleges unsuitability and misrepresentation with respect to recommendations to invest in and hold an options overlay strategy.” The customer is seeking $725,000 in damages. 

How to File a Claim Against Peter Rukeyser

Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.

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Author: Jeffrey Erez

The founder of Erez Law, Jeffrey Erez, focuses exclusively on securities arbitration and litigation. Mr. Erez passionately believes in representing aggrieved investors and obtaining justice for his clients through litigation.