The current investigation involves AllianceBernstein LP and Sanford C. Berstein & Co. and their brokers. These entities are being scrutinized for allegedly recommending their clients to invest in the Option Advantage Strategy, which is a complex options strategy designed to generate additional returns in a “low yield environment.”
The crux of the program was the “cash-free” appeal. This meant that returns were on funds already invested so that investors wouldn’t have to deposit more. The funds were collateral, and the additional returns relied on margins. The promotion of the Option Advantage Strategy occurred from 2018 until October 2022.
Your Financial Advisor’s Role
Financial advisors, along with brokers and broker-dealers, are required to make recommendations and (if applicable) trades in their client’s best interest. For that reason, they are also called a “fiduciary.” As someone you entrust with your investments and other financial decisions, you expect that they would not recommend something that wasn’t optimal for your investment objectives.
Yet many financial advisors readily suggested Options Advantage to their retail customers without knowing the full breadth of how it worked.
FINRA Arbitration
Your first thought may be to file a lawsuit against Alliance Bernstein. However, your financial advisor is the one who initially recommended the investment. Recovery may be possible through an arbitration action with FINRA, the Financial Industry Regulatory Authority. This agency oversees fiduciaries (brokers and financial advisors) and arbitrates disputes.
Arbitration is a form of alternative dispute resolution (ADR) that’s faster and frequently less expensive than a court proceeding. Many investment firms and broker-dealers require their customers to agree to arbitration or mediation for disputes in their contracts. FINRA operates the largest ADR forum for securities disputes in the US with considerable experience offering parties the opportunity to resolve conflicts.
Although you can represent yourself, the process is complex, much like a lawsuit. If you’re engaging in arbitration with an investment firm or broker-dealer, they will be represented by a law firm that understands securities law and the arbitration process. We strongly encourage you to speak with us about a FINRA arbitration action before you decide to proceed.
Did You Invest With Alliance Bernstein?
Many people were promised a safe, low-risk investment that was anything but. If you’re one of those whose financial advisor recommended Options Advantage, we can help you pursue a FINRA arbitration action to recoup some or all your losses.
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.