UPS Employees Could Recover Investment Losses

by InvestorLawyers on April 3, 2013

in Arbitration,FINRA,Merrill Lynch,Securities Fraud,Suitability

Investment fraud lawyers are currently investigating claims on behalf of employees of the United Parcel Service, better known as UPS, some of whom allegedly suffered significant losses as a result of the recommendation of financial advisers to maintain a leveraged, concentrated position in UPS stock. Through UPS’s Managers Incentive Program, many UPS employees received company stock.  Some employees then transferred the stock to full-service brokerage firms.

UPS Employees Could Recover Merrill Lynch Investment Losses

In many cases, the company stock was used as collateral for a “hypo loan,” which is obtained through the pledging of the securities to secure a loan. However, full-service brokerage firms may not have informed UPS employees of the risks associated with this type of loan. Those employees suffered significant losses from October 2008 through April 2009 when the value of UPS stock declined and they liquidated their investment.

One of the risks of maintaining a hypo loan is that of a margin call, which can result in a forced liquidation. As a result, the investor is not able to recover losses when or if the price of the stock rebounds. In the case of many UPS employees, securities arbitration lawyers say some of their losses could have been recovered as the company’s stock value rose since 2009.  However, due to the hypo loans some employees were forced to liquidate their UPS stock and therefore did not benefit from the subsequent recovery in UPS’s share price.

Furthermore, many UPS employee full-service brokerage accounts contained a concentrated position in UPS scotk.  Some individuals were not made aware of zero-cost collars, stop-loss orders, protective put options and/or exchange funds and how these risk management strategies could have protected their investment.   Some UPS employees may have sustained substantial losses that could have been prevented by these common risk management strategies.

If you are a current or former UPS employee who suffered significant losses in UPS stock in your  full-service brokerage firm account, 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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