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Harvest “Collateral Yield Enhancement Strategy (CYES)” Results in Huge Losses for Investors

Levin Law | 10.15.2019
Collateral Yield Enhancement Strategy

CYES Options Trading Strategy Far From Safe Bet for Some Investors

Clients of some of the largest financial firms in the world, including but not limited to, Merrill Lynch, Charles Schwab, Morgan Stanley, Fidelity, suffered huge losses as a result of a complex Collateral Yield Enhancement Strategy (CYES).  The CYES Options Trading Strategy was managed by Harvest Volatility Management (Harvest). Harvest has come under scrutiny for the resulting losses. Earlier this year, Victory Capital terminated a planned acquisition of the company citing “recent adverse market conditions affecting Harvest Volatility Management’s largest investment strategy.” 

Investors Seek Recovery through FINRA Arbitration

Many high-net-worth any other investors who were recommended and sold the CYES options strategy have filed arbitration through the Financial Industry Regulatory Authority (FINRA), a private arbitration process through which investors can bring claims against brokerage firms.  In those arbitration claims, investors allege that financial advisors and brokerage firms misled them regarding the level of risk they were being exposed to with the options strategy.  In many instances, investors were sold the CYES trading options strategy as a “safe” overlay to boost returns and hedge risk. Clients believed that they were investing in a strategy with minimal risk.  Unfortunately, the strategy backfired in volatile market conditions, a risk that was not disclosed to most investors. In December 2018, an unpredictable market yielded significant losses for CYES investors.

The Risk with Iron Condor Strategies

Harvest’s CYES options trading strategy required investors to borrow against their conservative portfolios using an “iron condor” approach.  The iron condor strategy is complex and can be quite risky. While generally, the risk can be low, it can cause significant monetary losses during volatile market conditions.  Recommending a CYES options strategy is likely unsuitable to many investors, particularly when it is represented to be a safe investment strategy. Despite the market showing signs of volatility, financial advisors and private wealth managers continued to recommend these strategies as being safe and low risk to clients resulting in substantial losses.

Recovering Losses Associated with a CYES

If you invested in a CYES or other yield-enhancement strategy and suffered losses, you might be entitled to recovery through FINRA arbitration.  Levin Law has recovered tens of millions of dollars for its clients through FINRA arbitrations. Contact Levin Law today for a free case evaluation at, through a contact form, or at (305) 402-9050 for a free consultation.  Levin Law accepts most FINRA cases on a contingency-fee basis, meaning that you are not obligated to pay Levin Law’s attorneys’ fees unless we recover money for you.  

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