The Securities Arbitration Law Firm of Klayman & Toskes (“K&T”), www.nasd-law.com, announced today that it filed a securities arbitration claim against Wells Fargo Advisors on behalf of a UPS (NYSE: UPS) employee for losses sustained as a result of maintaining a concentrated, leveraged position in UPS stock. The claim seeks damages of $4,000,000. The suit was filed with the Financial Industry Regulatory Authority’s (“FINRA”) Office of Dispute Resolution.
According to the Claim, the Claimant worked for over 40 years with UPS and accumulated over 234,000 shares of the company through UPS’ Employee Stock Purchase Plan and Managers Incentive Program. To facilitate purchasing the stock, a Hypothecation Loan (“hypo loan”) was opened whereby the UPS stock served as collateral. At one point, the Claimant moved his hypo loan to Wells Fargo and a Note and Security Agreement was executed with Wells Fargo. While Wells Fargo loaned Claimant money using his UPS stock as collateral, Wells Fargo failed to recommend a collar and/or protective put options as a risk management strategy to protect Claimant’s concentrated position in UPS stock. At one point, Claimant’s UPS stock was valued at over $16,000,000. A collar and/or protective put option would have prevented a collateral call on the loan when the UPS stock declined substantially below the loan-to-value-ratio. Wells Fargo, looking to make money on the loan, facilitated the unsuitable investment strategy of borrowing against a concentrated stock position without a risk management strategy in place. By failing to protect the concentrated position, Claimant received a collateral call which triggered the sale of his UPS stock.
The attorneys at K&T are dedicated to pursuing claims on behalf of investors who have suffered substantial investment losses. K&T, an experienced, qualified and nationally recognized securities litigation law firm, practices exclusively in the field of securities arbitration and litigation. It continues its representation of investors throughout the world in securities arbitration and litigation matters against major Wall Street brokerage firms.