KlaymanToskes (“KT”) continues to investigate and pursue FINRA arbitration claims against Merrill Lynch on behalf of UPS (NYSE: UPS) current and former employees for losses sustained from an unsuitable recommendation to employ a covered call writing strategy.
Many UPS employees were solicited to invest with Merrill Lynch after UPS stock went public in 1999. Merrill Lynch and its financial advisors recommended to many UPS employees a covered call options writing strategy, sometimes recommending the Rampart Options Management Services Program (“Rampart”) to facilitate the strategy that would generate income to help cover the cost of the UPS employees’ hypo loans. The problem with this call writing strategy was that when the UPS stock increased in price above the option strike price, in many cases, it forced the sale of UPS shares and/or required that the UPS shareholder buy back their stock at a substantial cost.
UPS employees have benefitted for many years from the growth, stability, and yield from the UPS stock. As a result, many UPS current/former employees accumulated a substantial number of shares that they planned to rely on during their retirement years. UPS has maintained or increased its quarterly dividend every year since 2000, increasing the dividend payout by nearly six times over the 20-year period. As such, employees were reluctant to sell their UPS stock. However, our firm has represented numerous former UPS employees who were forced to sell their stock triggering a significant tax liability from low cost basis stock and/or pay a substantial amount of money to buy back their UPS stock from this unsuitable call option strategy.
Today, UPS has nearly doubled in price, trading at nearly $160 per share. For any UPS shareholder who sold call options on UPS prior to August, the increase in value could have resulted in the investor having to buy back the call option or losing the UPS shares.
The sole purpose of this release is to investigate the sales practices of Merrill Lynch for its recommendation to engage in an unsuitable covered call writing strategy. Current and former UPS employees who held accounts at Merrill Lynch and have information relating to the manner in which the firm handled their concentrated portfolios, are encouraged to contact Lawrence L. Klayman, Esq., at (561) 542-5131, and download our Special Investor Report.