Oppenheimer Portfolio Enhancement Program (PEP) Investors Losses?

Soreide Law Group is investigating the Oppenheimer Portfolio Enhancement Program or “PEP”. OPPENHEIMER & CO allegedly offered its best clients an opportunity to generate an extra 5% on its portfolio by borrowing money on margin to participate in its proprietary PEP program. The minimum investment increment was $1.25 million. PEP was sold as a hedged investment, but it was anything but secure. PEP could only succeed in a low volatility, low interest rate environment. PEP bet that options on indexes such as the SP 500 would remain in a tight range allowing investors to collect premiums and boost overall investment returns up to 5% a year. This program was similar to the failed strategy of the UBS YES program and the Sanford Bernstein Options Advantage Fund. Oppenheimer failed to adequately explain that if the volatility in the market picked up the strategy would fail. PEP investors suffered significant losses and Oppenheimer quietly closed the program  

Recently Soreide Law Group filed a FINRA arbitration on behalf of our client (Claimant) against: 

OPPENHEIMER & CO., INC. (Respondent)

The Claimant is retired and maintains certain investments through an LLC. According to the lawsuit, the Claimant advised OPPENHEIMER & CO and its Financial Advisor, Matthew Steinberg, that he wanted to safely generate retirement income.  The lawsuit alleges that the Claimant was advised the Respondent could manage the portfolio on a discretionary basis and provide Claimant with the safe income sought. Steinberg is not named in this lawsuit.

The lawsuit alleges that OPPENHEIMER & CO and its Financial Advisor, Matthew Steinberg, selected a long-term bond portfolio that subsequently suffered multiple defaults causing the Claimant financial losses. The Respondent also allegedly recommended that the Claimant participate in a hedged proprietary options program known as the Portfolio Enhancement Program (PEP). The lawsuit alleges that the Respondent borrowed $1.25 million dollars on margin against the municipal bonds the Claimant owned. Allegedly, the PEP program was supposed to safely generate another 5% yield for the Claimant using hedged puts and calls. The lawsuit alleges that the Respondent failed to advise the Claimant that this program would only work in low volatility markets with low interest rates. The Claimant quickly suffered losses in PEP.

Then, according to the lawsuit, OPPENHEIMER & CO and Financial Advisor, Matthew Steinberg, allegedly sold the Claimant $250,000 in Alkeon 1, and $500,000 in Alkeon 2 on margin. These private equity investments are speculative and illiquid for at least another year. The Claimant fears that these investments will suffer losses like the municipal bonds and PEP.

The lawsuit alleges that OPPENHEIMER & CO and its Financial Advisor, Matthew Steinberg constitutes; breach of Respondent’s fiduciary duty to Claimant, breach of contract, fraud, failure to supervise, and violations of industry standards. The lawsuit states that the Claimant is entitled to $2,500,000.00 in damages plus interest, disgorgement of any benefit to OPPENHEIMER & CO, and costs.

If you’ve experienced similar investment losses due to the actions or recommendations of OPPENHEIMER & CO, and/or Financial Advisor, Matthew Steinberg, contact Soreide Law Group and speak to an experienced securities lawyer at no cost regarding the possible recovery of your financial losses through a FINRA arbitration at:  888-760-6552.

Soreide Law Group represents clients nationwide before FINRA on a contingency fee basis, no fee to you if no recovery.