UBS’ involvement in Puerto Rico investments continues to explode, as the customer arbitrations against the firm start to heat up. UBS has confirmed that FINRA and the SEC are not only looking into the recommendations of the funds, but now they are investigating the structure of the funds.
This week UBS reported that it is facing criminal investigations into the use of non-purpose loans to invest in closed-end funds, in violation of various agreements and policies.
In 2014 UBS settled allegations with the Office of the Commissioner of Financial Institutions for the Commonwealth of Puerto Rico (OCFI) in connection with OCFI’s examination of UBS’s operations from January 2006 through September 2013. Pursuant to the settlement, UBS contributed $3.5 million to an investor education fund, offered $ 1.68 million in restitution to certain investors and, among other things, committed to undertake an additional review of certain client accounts to determine if additional restitution would be appropriate.
UBS has been defending an onslaught of customer claims from investors in its Puerto Rican bond funds, who claim that the products were improperly structured, and/or were unsuitable for the particular investor. More information regarding the investigations and arbitration is here.
UBS has been settling the cases with its customers who are making allegations of unsuitable investments; breach of contract and fiduciary duty; negligence; and failure to supervise , as well as violation of Section 10(b) of the Securities Exchange Act, Rule 10b-5 of the Securities Exchange Commission, NYSE and FINRA rules, and the securities laws and other laws and regulations of Puerto Rico; and violation of Article 1802 of the Civil Code of Puerto Rico 31 Laws of Puerto Rico §5141, relating to the purchase and recommendation of UBS’s funds, including Puerto Rico AAA Portfolio Target Maturity Fund and a Note of the Employees Retirement System of Puerto Rico and a variety of Puerto Rico closed-end mutual funds concentrated in Puerto Rico bonds.
For the cases that UBS has not settled, it continues to lose the cases with arbitrators awarding damages to the injured investors. Just this week a FINRA arbitration panel in San Juan awarded $250,000 to investors against UBS.
Our firm is offering to review the statements, and details regarding these investments from investors and brokers who have been involved with these securities. Call us at 212-509-6544 to see if we can be of assistance.