Kirby McInerney Investigates So-Called “Collateral Yield Enhancement” or “CYES” Options Trading Strategy Which Caused Significant Losses to High Net Worth Clients of Merrill Lynch, Morgan Stanley, and Other Firms

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Investors injured by overly risky account “overlay” may have
meritorious arbitration claims.

Adequacy of disclosures and level of portfolio margining and
diversification are investigated.

NEW YORK–(BUSINESS WIRE)–$BAC #investorrights–Investor rights attorneys at the law firm of Kirby
McInerney LLP
are investigating potential securities arbitration
claims against Merrill
and other financial advisory firms in connection with a risky options
trading strategy – dubbed the Collateral Yield Enhancement Strategy or
CYES – which caused substantial losses to numerous high net worth

Injured investors may have meritorious securities arbitration claims and
are urged to contact Kirby McInerney partner Mark
A. Strauss
at 212-371-6600 or by email at
for a free consultation.

Iron-Condor options trading strategy causes steep investor losses

The Collateral Yield Enhancement Strategy involved borrowing against or
“margining” investors’ conservative stock or bond portfolios to invest
in “Iron Condor” options trading structures managed by a third-party
investment advisory firm, Harvest
Volatility Management
. An Iron Condor is a well-known trading
strategy that involves a pair of options “spreads.”

Harvest’s Iron Condors involved selling or “writing” short-dated “out of
the money” call and put options on the S&P 500 Index, while
simultaneously buying call and put options on that Index which were
further “out of the money”. The objective was to generate income through
the premiums received on the options that were sold, while containing
risk and minimizing losses through the options that were purchased.

Financial advisors and private wealth managers promoted the CYES
strategy to high net worth and ultra-high net worth clients as a safe
account “overlay” which would boost returns with minimal risk, and which
would perform best in periods of low stock market volatility.

In December 2018, however, the stock markets experienced large price
swings and surging volatility, resulting in massive losses for investors
in the CYES options trading strategy.

In the aftermath, on April 22, 2019, investment management firm Victory
Capital announced that it was withdrawing from a deal to acquire Harvest
for roughly $300 million. Apparently, due to the substantial account
drawdowns that CYES investors suffered, Harvest’s revenues (which are
based on the amount of assets under management) had declined by more
than 20%, thus triggering the termination
of Victory’s acquisition agreement. Indeed, Victory Capital
cited “recent adverse market conditions affecting [Harvest]’s largest
investment strategy” – which was CYES – as the reason for nixing
the deal

In addition, numerous investors reportedly filed arbitration complaints
with the Financial Industry Regulatory Authority (FINRA) to recoup their

Adequacy of risk disclosures investigated

Attorneys at Kirby
with substantial experience litigating complex securities
matters are investigating whether investors in the Collateral Yield
Enhancement Strategy options trading strategy were misled by their
financial advisors or private wealth managers as to the strategy’s risks
– both before investing and on a continuing basis as market volatility
showed signs of increasing.

Also being investigated is whether, as a result of their CYES options
trading positions, client accounts were overleveraged through excessive
use of portfolio margin or were inadequately diversified, and whether
the Iron Condor options structures utilized were appropriately staggered
and laddered to minimize risk and avoid excessive losses.

It is believed that investors injured by the CYES options trading
strategy include high net worth and ultra-high net worth clients of Merrill
, Morgan
, Charles
and Fidelity,
as well as of independent Registered Investment Advisors (RIAs)
affiliated with the investment clearinghouse BNY
Mellon Pershing
All are firms which reportedly partnered with Harvest to offer the CYES
account “overlay”, according to a March
2017 article on

If you suffered losses investing in the CYES options trading strategy
and would like to discuss your legal rights – including the possibility
of filing an arbitration complaint with FINRA – please contact attorney Mark
A. Strauss
of Kirby McInerney at 212-371-6600 or by email at
The consultation is free; there is no cost to you.

About Kirby McInerney LLP

McInerney LLP
is a New York-based law firm representing plaintiffs
in securities, whistleblower, antitrust, and consumer litigation
throughout the country. The firm is committed to the aggressive pursuit
of justice and championing the rights of investors through arbitrations,
class actions, and individual lawsuits. The firm’s efforts on behalf of
investors in securities litigation and arbitration have resulted in
recoveries totaling billions of dollars. The firm has been profiled by as one of the “Most
Feared Plaintiffs’ Firms
,” and named to The National Law Journal’s
Plaintiffs’ Hot List. Additional information about the firm can be found
on the firm’s website at

This press release may be considered Attorney Advertising in some
jurisdictions under applicable law and rules of professional
responsibility. Prior results do not guarantee similar outcomes.


Mark A. Strauss, Esq.
Kirby McInerney LLP
250 Park Avenue,
Suite 820
New York, N.Y. 10177
Tel: (212) 371-6600