By failing to protect the concentrated position and/or recommend risk management strategies, the claimants received collateral calls or margin calls which triggered the sale of UPS stock. These sales occurred with UPS at substantially low prices and caused the claimants to incur large capital gains taxes as the UPS stock had a low cost basis from the MIP. While these claimants lost their shares, UPS rebounded and now trades at about $100 per share.The sole purpose of this release is to investigate, on behalf of our clients, the sales practices of full-service brokerage firms in connection with the handling of concentrated, leveraged stock portfolios for UPS employees. Current and former UPS employees who held accounts with full-service brokerage firms and have information relating to the manner in which the firm handled their concentrated, leveraged portfolios, are encouraged to contact Steven D. Toskes, Esquire or Jahan K. Manasseh, Esquire of Klayman & Toskes, P.A., at 888-997-9956, or visit us on the web at www.nasd-law.com.
The Securities Arbitration Law Firm of Klayman & Toskes (“K&T”), www.nasd-law.com, announced today that it is continuing to investigate and file claims on behalf of current and former UPS (NYSE: UPS) employees who sustained investment losses as a result of maintaining a concentrated, leveraged position in UPS stock. The cases filed by K&T, which were filed against full-service brokerage firms with the Financial Industry Regulatory Authority (“FINRA”), involve current and former UPS employees who incurred margin or collateral calls in 2008 and into 2009 and were forced to liquidate their UPS shares. Unfortunately, in many cases, the brokerage firms who facilitated the margin or collateral loans, using the concentrated UPS positions as collateral, failed to recommended risk management strategies which would have reduced or eliminated margin/collateral call risk. Despite the passage of time since the 2008-2009 time frame, UPS investors still have time to bring a securities arbitration claim to attempt to recover their investment losses. Under FINRA Rules, investors have six (6) years from the “occurrence or event” giving rise to the claim to file a claim. Accordingly, investors should act quickly to determine if they are eligible to recover their losses. According to the claims filed by K&T, the claimants worked for many years with UPS and accumulated shares of the company through UPS’ Managers Incentive Program (“MIP”). To facilitate purchasing the UPS stock, the claimants opened Hypothecation Loans (“hypo loans”) whereby the UPS stock served as collateral. At one point, the claimants moved their hypo loan to various brokerage firms whereby the claimants continued to use their UPS stock as collateral against the loan. While the brokerage firms loaned the claimants money using their UPS stock as collateral, the firms, in many cases, failed to recommend a collar and/or protective put option as a risk management strategy to protect the claimants’ concentrated positions in UPS stock. A collar and/or protective put option would have prevented a collateral call on the loan when the UPS stock substantially declined below the loan-to-value ratio. The act of collaring the stock or implementing a protective put option would have increased the borrowing power allowing the customer to borrow up to 90% of the protective put option strike price. By doing so, this would have prevented all or most of the collateral calls that the customer received as a result of owning a concentrated UPS stock position that served as collateral against the hypo loan.