Those concerned benefited from "commercial gestures" following substantial losses resulting from the collapse of the dollar, itself following the famous "day of liberation" introduced by Donald Trump (which was ultimately followed by the "day of backpedaling," but that's another story).
The fall of the greenback took with it structured products that were supposed to "benefit" from a certain routine. When everything is going well, of course. Here is the essence of the products as explained by the FT: the derivative product in question, although not new, is normally intended for sophisticated investors or those inclined to take high risks. It is based on an agreement whereby the customer regularly exchanges dollars for Swiss francs at a fixed rate, as long as the exchange rate remains within a defined range. If the rate falls outside this range, the customer is forced to continue trading under unfavorable conditions. And the longer it lasts, the more it hurts.
According to a lawyer representing several clients quoted by the FT, the risks were not "fully or clearly" explained. Translation: the bank did not sufficiently warn these supposedly sophisticated clients that they could take a big hit. While some of them have been compensated, others have decided to take the matter to court, claiming that they were approached a little too aggressively, or even misled when they expressed concern about the downward trend in their assets. "After all, UBS may not know its customers that well," notes a source familiar with the case, who believes that this says a lot about the weakness of customer due diligence (KYC) procedures.
The bank with the three keys has assured that it is taking the matter very seriously by handling each case individually within a dedicated unit. It remains to be seen whether the total amount of "commercial gestures" will be significant enough to be isolated in the accounts.
