Former clients of UBS Financial Services, Inc. settled three FINRA arbitrations for losses sustained from investments in high risk oil and gas stocks. The investors were clients of financial advisors John Carolyn (CRD# 4485799) and Alfred Kovacs (CRD# 1338713).
In August 2016, a former client of UBS Financial Services, Inc. filed a FINRA arbitration for $450,000 in compensatory damages, alleging that UBS Financial Services, Inc. brokers Carolyn and Kovacs, over-concentrated their accounts in high risk oil and gas stocks, including Magnum Hunter Resources Corp. and Halcon Resources Corp. The claim asserted the following causes of action: negligence, breach of fiduciary duty, negligent supervision, and breach of contract. The case was settled for $97,800.
In July 2016, another former client of UBS Financial Services, Inc. filed a FINRA arbitration for $85,000 in compensatory damages, alleging that Carolyn over-concentrated their accounts in high risk oil and gas stocks, including Magnum Hunter Resources Corp., Halcon Resources Corp., and Occidental Petroleum. The claim asserted the following causes of action: negligence, breach of fiduciary duty, negligent supervision, and breach of contract. The case was settled for $57,800.
In July 2016, another former client of UBS Financial Services, Inc. filed a FINRA arbitration for $100,000 in compensatory damages, alleging that Carolyn and Kovacs over-concentrated their accounts in high risk oil and gas stocks, including Magnum Hunter Resources Corp., Halcon Resources Corp., and Vanguard Energy Fund. The claim asserted the following causes of action: negligence, breach of fiduciary duty, negligent supervision, and breach of contract. The case was settled t for $45,000.
Kovacs and Carolyn also requested references to the occurrences be expunged from their CRDs. This request was granted for Kovacs, but not for Carolyn.
Many oil and gas companies have experienced price fluctuations over the past few years, which has put financial stress on the oil and gas industry. A supply glut in 2014 and 2015 led to some of the lowest prices the market has seen in recent years. In turn, securities values also dropped. While financial advisers can effectively coax clients into lucrative high risk, high yield investments in the oil and gas industry, some fail to fully inform their clients of the inherent risks.
Carolyn has been registered with UBS Financial Services Inc. in Houston, Texas since 2002. In addition to the three cases above, Carolyn has been the subject of three customer complaints between 2015 and 2017, one of which was denied, according to his CRD report:
- February 2017. “Time Frame: 2014-2016. Claimants allege they were unsuitably concentrated in oil and gas investments.” The customer is sought $70,000 in damages and the case is was settled for $34,000.
- June 2016. “Time Frame: 2007-2016 Claimants allege UBS recommended overconcentration in energy securities.” The customer is seeking $750,000 in damages and the case was settled for
$117,000. - Kovacs has been registered with UBS Financial Services, Inc. in Houston, Texas since 2007. In addition to the two cases above, Kovacs has also been the subject of seven additional customer complaints, one of which was denied, between 1999 and 2017, according to his CRD report:
- February 2017. “Time Frame: 2014-2016 Claimants allege they were unsuitably concentrated in oil and gas investments.” The customer sought $70,000 in damages and the case was settled for $34,000.
- June 2016. “Time Frame: 2007-2016 Claimants allege UBS recommended overconcentration in energy securities.” The customer sought $750,000 in damages and the case was settled for $117,000.
- December 2014. “Claimants allege that the insurance policy and related investment and loan transactions recommended by the financial advisor were unsuitable and unauthorized. In the second amended statement of claim filed on 2/4/16, claimants make additional allegations of unsuitability in reference to the purchase of a certain variable annuity. Time frame: May 16, 2014 to August 18, 2014.” The customer sought $4 million in damages and the case was settled for $875,000.
- August 2009. “Claimants allege that financial advisor recommended unsuitable investments in ubs structured products. Time frame: Feb 2008 to August 2008.” The customer sought $90,000 in damages and the case was settled for $25,000.
- September 2002. “**suitability** Customer alleges rep guaranteed performance on high tech stock performance.” The customer sought $37,000 in damages and the case was settled for $13,000.
- April 1999. “Customer alleges that his instructions for an order were not completed. Customer claims damages of $300,000.”
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, UBS Financial Services, Inc. may be liable for investment or other losses suffered by Carolyn’s and Kovacs’ customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and 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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