Credit Suisse Yield Enhancement Strategy Recommendation Under Investigation

by InvestorLawyers on March 14, 2013

in Arbitration,Credit Suisse,FINRA,Retirement,Securities Fraud,Suitability

Stock fraud lawyers are currently investigating claims on behalf of Credit Suisse Securities (USA) LLC customers who received recommendations to invest a significant portion of their funds in the Yield Enhancement Strategy and suffered significant losses as a result. The Yield Enhancement Strategy, or YES, is a high-fee proprietary strategy and may not be suitable for many investors.

Credit Suisse Yield Enhancement Strategy Recommendation Under Investigation

Allegedly, Credit Suisse may have recommended the Yield Enhancement Strategy to some investors without properly explaining the risks to customers or considering their investment objectives and risk tolerances.

According to a recent statement of claim regarding this investment, advisors for Credit Suisse allegedly used literature that stated the goals would be achieved by the strategy by “selling short-term out-of-the-money puts and calls on the S&P 500 index.” Furthermore, the literature allegedly claimed that in order to “manage downside and upside market exposure, short term below-market put and above-market call options are purchased with the same duration as the puts and calls sold.” Securities arbitration lawyers say the allegations in the suit are that the strategy to “provide an additional source of income to portfolios when markets are flat, trending higher or trending lower” failed and, in a little over two years, more than $500,000 in losses and $200,000 in investor fees resulted.

According to stock fraud lawyers, the unsuitable recommendation of the Yield Enhancement Strategy may have resulted in significant losses for some investors. Financial Industry Regulatory Authority rules have established that brokers and firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and that those recommendations must be suitable for the investment profile of the customer receiving the recommendation. FINRA Rule 2111 states that a “customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”

If a Credit Suisse advisor recommended the Yield Enhancement Strategy to you and the investment was unsuitable or the advisor failed to disclose the risks, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.

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