If you invested in Alliance Bernstein’s Option Advantage and have questions about your legal rights, or if you have information relevant to this matter, contact Silver Law Group for a no-cost consultation at 800-975-4353 to discuss your potential options.
Advisors with global asset management firm Alliance Bernstein encouraged their investment customers to invest in a new and complicated options strategy they called “Options Advantage.” This strategy was described as something for investors who were “seeking incremental return in a low yield environment.”
Investors describe the Options Advantage strategy as a low-risk and low-volatility method to earn an additional annual return of 1% to 2% based on assets already managed by the firm. These investors could earn this extra return without any additional cash. The investment promoted the use of margin to make it a “cash free” strategy.
Unfortunately, this “strategy” wasn’t exactly what the firm described. It speculated on the direction of markets through the purchases and sales of call and put those options on the S&P 500. It then became a series of precarious gambles based on the direction of the market indexes that leveraged margins. The company eventually admitted that this strategy wasn’t suitable for volatile markets. From the beginning, investors saw significant losses while their investment advisors continued appeasing them.
Timeline
Alliance Bernstein offered this investment strategy from 2018 through its sunset in October of 2022, when the firm notified investors of its intent to sunset the program. In it, the firm described the strategy, and the high market volatility that led to losses, listing factors such as interest rate increases, inflation, the war in Ukraine, and other factors for the volatility. This letter also stated that once the fund concludes, the firms will continue to uphold investors’ margin accounts without any interest for 12 months. After that, the firm would charge a preferential rate.
Sanford C. Bernstein & Co. and Alliance Bernstein are currently facing lawsuits that accuse them of securities fraud, misrepresentation, and/or omission concerning the Options Advantage Strategy. According to the claims, Bernstein allegedly exercised its discretion to speculate on market direction using call and put options on major market indexes. This speculative approach resulted in significant losses associated with the strategy. There is a belief that the financial advisors and brokers who recommended the strategy may have also been misled by Bernstein regarding the Options Advantage Strategy. Clients who were advised to pursue the Options Advantage Strategy were encouraged to open a margin account for implementing the strategy. Some clients may now have a margin account balance remaining following this failed strategy.
If you were an investor in the Option Advantage Strategy, Silver Law Group would be happy to speak with you to discuss your next moves and how we can help.
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Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.