AllianceBernstein Option Advantage Lawsuits
Financial advisors with the multi-billion-dollar global investment management firm AllianceBernstein led customers and investors to invest in a new complex options strategy called Option Advantage. They described the program as a safe, low-risk option for investors “seeking incremental return in a low-yield environment.” One of the appeals was that this alleged low-risk, low-volatility strategy promoted the use of margin to avoid investors having to deposit additional funds.
Yet, the strategy was anything but safe. Instead, it was a risky gamble. Now nationwide investment fraud law firm Meissner Associates is filing Option Advantage lawsuits on behalf of investors seeking to recoup their significant financial losses.
If you invested in the AllianceBernstein Option Advantage strategy upon the advice of your financial advisor, and suffered financial losses, our experienced investor rights lawyer can help you seek compensation through the FINRA arbitration claims process.
Why Choose Meissner Associates for Your AllianceBernstein Option Advantage Claim?
Meissner Associates is a New York-based law firm serving clients nationwide in FINRA arbitration, FINRA investor arbitrations, FINRA Regulatory Issues, SEC whistleblowing, SEC regulatory issues, and employment disputes. Stuart D. Meissner Esq., Managing Member of the firm, is an experienced counsel who has successfully represented numerous investors in FINRA arbitrations against major Wall Street investment banks.
Meissner Associates is committed to helping AllianceBernstein clients with meritorious claims involving the AllianceBernstein Option Advantage program recover losses through the FINRA alternative dispute resolution process.
Additionally, any witnesses who may have information related to the events of this failed investment strategy are urged to contact Meissner Associates. Rest assured that the Whistleblower Protection Act ensures that employees who engage in protected disclosure are free of reprisal and protected from retaliation for their disclosures.
What Was AllianceBernstein’s Option Advantage Strategy?
In 2018, AllianceBernstein, along with other Wall Street brokerage firms, sought to take advantage of the low-interest rate environment by offering their customers certain options programs or strategies to generate premium, also known as “enhancing yield.” These strategies were marketed to investors as a “safe” way to enhance their portfolio income efficiently. However, these options strategies can be vulnerable and rapidly deteriorate when markets become volatile.
Often, these options strategies involve writing “iron condors” through S&P 500-derived options. The most common financial instrument used is the S&P Index (SPX), derived from the 500 largest companies whose stock is listed for trading on the NYSE or NASDAQ. AllianceBernstein’s Option Advantage strategy sought to sell short-term SPX options to generate enhanced yield for its customers. Simultaneously, the options overlay strategy sought to purchase longer-term SPX options to provide some risk mitigation.
However, a significant degree of risk is associated with selling short options for income, especially in rapidly moving markets where the underlying asset might experience significant volatility. And as a result, investors become at risk for potentially outsized losses.
Why Are Option Advantage Investors and Customers Filing Claims Against AllianceBernstein?
As noted above we should move this information up as it is most important in distinguishing us from others promoting these cases who don’t have any – In March 2023, Meissner Associates filed an Option Advantage Lawsuit against Sanford C. Bernstein & Co., LLC and Alliance Bernstein L.P. (now known as AllianceBernstein, or simply AB), on behalf of a married couple. The couple claims that, in 2018, they were encouraged by their financial advisors to invest in AllianceBernstein’s new Option Advantage strategy under the premise that the low-risk, low-volatility, cash-free investment would yield an additional 1-2% annual return on assets they already had invested in the firm. But instead of being the safe bet their advisors had alluded to; the couple claims the Option Advantage strategy turned out to be a huge gamble that cost them nearly a half million dollars.
The couple claims AllianceBernstein used its discretion to speculate on the direction of the markets through the purchase and sale of call and put options on the S&P 500, which turned into a series of bets on the direction of the market indexes utilizing the leverage of margin. It was a disastrous bet. In an October 2022 letter to Option Advantage investors, AllianceBernstein wrote:
“Over the last few years, the volatility that ultimately drives the investment outcomes of the strategy has increased. After a period of relative calm in 2021, this higher volatility environment has become particularly pronounced in 2022, manifested by extreme swings in the S&P 500. Additionally, come off the behavioral biases that historically enhanced option premiums may have shifted.” This does not read correctly – did you copy it correctly?
The letter blamed global volatility for the recent uncertainty, namely the risk of recession, the war in Ukraine, interest rate increases, and inflation. AllianceBernstein ultimately admitted its strategy was not meant for volatile markets. But this admission didn’t come until investors were out a significant amount of money.
The letter also said the firm would continue upholding investors’ margin accounts without interest for 12 months. Afterward, the firm would charge a preferential rate.
What Do the AllianceBernstein Option Advantage Lawsuits Allege?
Investors claim AllianceBernstein misrepresented and omitted material information in presenting and promoting the Option Advantage strategy and continued to do so while the strategy remained active from 2018 through October 2022.
Meanwhile, AllianceBernstein continued to earn fees off its clients’ accounts. Among its failures, AllianceBernstein failed to test its strategy during volatile markets before presenting it to their clients. Investors, like Meissner Associate’s clients, are filing Option Advantage lawsuits accusing AllianceBernstein of securities fraud, misrepresentation, and/or omission concerning the Option Advantage strategies. The plaintiffs seek reimbursement of their losses, account fees, attorney fees, expenses, and treble damages.
The Financial Advisor’s Role
Financial advisors, brokers, and broker-dealers registered with the U.S. Securities and Exchange Commission (SEC) have a legal obligation to abide by fiduciary duty and, as a result, make recommendations and trades in their client’s best interest and ahead of their own interests. Investors entrust financial advisors with their investments and other financial decisions to make recommendations in step with their investment objections. Unfortunately, advisors readily suggested Option Advantage to their customers without realizing how the strategy worked. In the end, it was the investors who were left with significant losses.
How Can I Recover Your AllianceBernstein Option Advantage Losses?
If you suffered losses by investing in the AllianceBernstein Option Advantage strategy, your first inclination might be to file a lawsuit against AllianceBernstein seeking to recoup your financial losses or the financial advisor who initially recommended the investment to you. However, many investment firms and broker-dealers require customers to agree to arbitration or mediation for contract disputes.
Instead, investors may have the right to recover their losses by filing an arbitration action with the Financial Industry Regulatory Authority (FINRA), the agency that oversees fiduciaries and arbitrates disputes when they arise. Most FINRA arbitration claims are resolved within 12 to 18 months.
Arbitration is a form of alternative dispute resolution that’s faster and usually less costly than court proceedings. FINRA operates the largest alternative dispute resolution forum for securities disputes in the U.S. The process is complex and operates similarly to a lawsuit, so it is recommended that you retain your own legal representation if you wish to proceed in this manner. AllianceBernstein is a global company that manages nearly $780 billion in assets worldwide. They have a team of lawyers experienced in securities law and the arbitration process. You’ll want to even the playing field by having a similarly experienced attorney, like Meissner Associates, representing you and your interests.
What is AllianceBernstein?
AllianceBernstein was founded in 1967 as a private securities firm under the name of its founder, Sanford C. Bernstein, and grew to become one of the country’s largest independent investment management firms. In October 2000, Sanford C. Bernstein merged with the global investment management firm Alliance Capital, to form AllianceBernstein. In 2015, the firm simplified its name to AB. AllianceBernstein now employs about 3,450 people and manages $779 billion in assets worldwide for clients ranging from individual investors to large institutions. In 2022, the firm reached its peak revenue of $4.4 billion.
AllianceBernstein Option Advantage Lawsuits FAQs
Why are AllianceBernstein customers filing lawsuits?
Customers of the global investment management firm AllianceBernstein were lured by their financial advisors to invest in a new complex options strategy called Options Advantage. The investors were led to believe the investment was a safe way to enhance their portfolio income. Instead, the strategy fell apart in the volatile market, resulting in significant losses to AllianceBernstein investors.
How can I recoup my Option Advantage strategy losses?
Many investment firms and broker-dealers require customers to sign arbitration or mediation agreements in the event of a contract dispute. So, investors have the right recover their losses by filing an arbitration action with the Financial Industry Regulatory Authority (FINRA). This agency oversees fiduciaries and arbitrates disputes when they arise among these parties. Arbitration proceedings are similar to court proceedings but generally faster to resolve and less expensive.
Do I need a lawyer to file a FINRA arbitration claim?
Because the FINRA arbitration process operates similarly to a lawsuit, it is recommended that those who file claims retain their own legal representation, especially with Options Alliance Strategy claims against a global investment management firm like AllianceBernstein. AllianceBernstein has a team of securities law and arbitration lawyers on its side, and you’ll want to even the playing field with an equally experienced attorney.
What if I am an AllianceBernstein employee with sensitive information related to the Option Advantage strategy?
Any witnesses who may have information related to the events of this failed investment strategy are urged to contact Meissner Associates. The Whistleblower Protection Act ensures that employees who engage in protected disclosure are free of reprisal and protected from retaliation.
Contact the Nationwide Investment Fraud Lawyers at Meissner Associates Today About Your AllianceBernstein Option Advantage Lawsuit
Managing Member Stuart Meissner is a former prosecutor of over a decade and has successfully represented investors, employees and whistleblowers for over 22 years. In his capacity as a tenacious litigator, Mr. Meissner draws from his years of litigation experience accrued at the New York State Attorney General’s Office, the Manhattan District Attorney’s Office and private practice to assist his clients who have lauded his work on their behalf over the years.
As noted above we should also move this information up to distinguish us from the other firms advertising for these cases – In August 2022, as reported in Barron’s, the Meissner firm won a FINRA arbitration award totaling almost $800,0000, including attorney fees, against Charles Schwab and investment advisory firm Pinnacle Associates, relating to another options strategy program promoted to their clients.
Meissner Associates is now investigating claims from AllianceBernstein clients with meritorious claims involving the investment firm’s Option Advantage strategy to recover losses through the FINRA alternative dispute resolution process.