Articles Posted in UBS

SSEK Investigating David Fagenson, A Former UBS Brokerage Investment Advisor 

If you are an investor who worked with former UBS broker, David Fagenson, and suffered substantial losses or suspect you may have been charged excessive fees and commissions, please contact our broker fraud lawyers at Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) today. 

David Fagenson was suspended by the Financial Industry Regulatory Authority (FINRA) last year after he allegedly engaged in unsuitable trading in the accounts of three senior investors ranging in age from their 70s to mid-90s. However, this is not the first fraud allegation in which Fagenson has been involved. 

UBS Financial Services (UBS) brokers Matthew Buchsbaum and Scott Rosenberg are currently the subjects of multiple investor fraud claims by firm clients who blame them for losses they sustained from the UBS YES Strategy. This Yield Enhancement Strategy (YES) is a complex investment strategy and it is not suitable for every investor.

Involving an options overlay strategy, the UBS YES Strategy uses four options having the same expiration date but different strike prices. It employs the strategic buying and selling of SPX options spreads.

UBS YES Strategy investors were told to expect “incremental returns” along with the chance to earn income through low yield assets. 

A Financial Industry Regulatory Authority panel (FINRA) has awarded one of our clients, a 91-year-old widow, $550K in her Texas broker-dealer fraud case against UBS Financial Services (UBS). The claimant, who is from Texas, contends in her Houston senior investor fraud case that because her UBS broker made unsuitable investments on her behalf, she lost hundreds of thousands of dollars in her retirement accounts.

While the FINRA arbitration award doesn’t name the broker, Shepherd Smith Edwards and Kantas lawyer David Miller identified him as former UBS broker William Andrew Hightower. Attorney Miller said that Hightower, who headed up Hightower Capital Group, recommended that the claimant invest in leveraged and inverse exchange traded products and structured products,  as well as his own private investments. These investments were not suitable for her.

Hightower is now accused of operating a $10M Ponzi fraud. Among the unsuitable investments that he made on our client’s  behalf were those involving private placements Reproductive Research Technologies and Isospec Technologies, which were part of his alleged scam, and one fake private annuity.

U.S. District Judge Sidney H. Stein is refusing to grant class action certification to a group of investors suing UBS Puerto Rico over its sale of proprietary closed-end mutual funds. In particular, the class action complaint dealt with a series of 23 closed-end bond funds that UBS Puerto Rico developed and marketed exclusively to Puerto Rico residents.

These proprietary closed-end funds were comprised of at least 2/3 Puerto Rico debt (and often much higher), resulting in a geographic concentration that placed the owners of such funds at a great risk if anything negative happened on the island. Additionally, the UBS closed-end funds were highly leveraged, typically borrowing $1 for every $1 invested, meaning that any losses in the closed-end funds would be significantly increased.

Notwithstanding the above, the plaintiff investors say that UBS falsely depicted these closed-end mutual funds as safe and secure investments that would garner fund holders tax-free income when, in truth, the mutual funds were “ticking time bombs” that were actually very risky.

Roanoke, VA – August 1, 2014

Lawyers with the Securities Law Firm of SHEPHERD SMITH EDWARDS & KANTAS LLP, www.sseklaw.com, are investigating claims involving Donna Tucker and UBS Financial Services, Inc.  Donna Tucker worked as a broker with A.G. Edwards for four years until she joined UBS Financial Services in November of 2007.  After working at UBS for about six years, Ms. Tucker was permanently barred from the industry by the Financial Institute Regulatory Authority (“FINRA”).  FINRA began conducting an investigation sometime in 2013, during which it requested information from Ms. Tucker.  When Ms. Tucker refused to comply with that request, her license was suspended, and she was later permanently barred from working in the industry.

Recently, the Securities and Exchange Commission charged Donna Tucker of operating a Ponzi scheme for almost the entire period of time she was working at UBS.  According to the SEC complaint, Ms. Tucker stole over $730,000 from her clients between January 2008 and April 2013.  She did this by forging checks drawn on client accounts, establishing margin loans on customer accounts without the knowledge or approval of the client, and used those funds to repay other customers.  To hide her actions, she ensured that her clients only received electronic statements, which Ms. Tucker knew her elderly clients would not check, and then falsified records that did not show anything amiss.  Ms. Tucker then used this money to fund a lavish lifestyle for herself, including vacations, multiple cars, expensive clothing, and a country club membership.

In the U.S. Securities and Exchange Commission’s (SEC) Puerto Rico bond fraud case against ex-UBS Puerto Rico broker Jose Ramirez, a federal judge has found that Ramirez committed fraud and was in violation of securities laws when he directed customers to use lines of credit to purchase Puerto Rico closed-end funds.  In 2015, the SEC had filed charges against Ramirez accusing him of misleading customers regarding the Puerto Rico closed-end funds while advising them to use money from UBS Bank USA credit lines to buy UBS Puerto Rico fund shares. Ramirez allegedly made an additional $2.8 million in commissions as a result. The brokerage firm fired Mr. Ramirez in 2014.

According to U.S. District Court Judge Pedro Delgado-Hernandez, who granted the SEC’s motion for summary judgment, the ex-UBS Puerto Rick broker lied to customers and failed to tell them that if their collateral went down in value and reached a certain point, the customers might need to have their accounts liquidated to pay back the loans.

In 2013, following a number of credit downgrades, the Puerto Rico closed-end funds saw a substantial drop in value.  By September 2013, more than three dozen of Ramirez’s customers had $37 million in “margin maintenance calls” that required many clients to have their accounts liquidated.

A former UBS (UBS) banking official is claiming that Wall Street banks like his previous employer played a key role in the Puerto Rico economic crisis that has left the U.S. territory more than $70 billion in debt and mired in bankruptcy-like proceedings. The ex-UBS official, Carlos Capacete, was interviewed as part of a joint NPR and FRONTLINE probe.  Capacete worked for UBS Puerto Rico (UBS-PR) for over a quarter of a century and was the head of the biggest UBS branch on the island in Hato Rey.  At one point, Capacete oversaw $3 billion in client assets. Capacete left UBS in 2014 shortly after the crash in Puerto Rico bonds.

Prior to the market crash, Puerto Rico bonds and closed-end bond funds were highly profitable sales products for UBS and other banks on the island. While trying to prevent a government shutdown a number of years back, the U.S. territory started to borrow to pay for yearly government costs. This added $48 billion of debt in 14 years, reports PBS and FRONTLINE.

The Puerto Rico Debt Crisis Only Increased as Banks Made More Money 

A Financial Industry Regulatory Authority Panel has ruled that UBS must pay claimant Antonio Gnocchi Franco $204,000 in compensatory damages and $66,000 in costs for his Puerto Rico bond fraud case. Franco, a Puerto Rico resident who was also the trustee of his law firm’s pension plan, accused the brokerage firm of negligence, misrepresentation, breach of fiduciary duty, breach of contract, unauthorized trading, unsuitability, overconcentration, failure to supervise, unauthorized use of loan facilities, and unjust enrichment. According to the complaint, UBS had recommended that Franco invest in UBS bond funds and Puerto Rico bonds.

This customer win is yet another in a long line of customer wins against UBS for its investment and brokerage services provided in Puerto Rico. To date, FINRA arbitrators have ordered UBS to pay hundreds of millions of dollars to investors and UBS has paid many hundreds of millions more in settlements. Recently, UBS Puerto Rico and UBS Financial Services lost another Puerto Rico bond fraud case and were ordered to pay five former customers $521,000 in compensatory damages.

In total, UBS has been named in FINRA arbitration claims brought by thousands of investors that lost money from investing in UBS-packaged bond funds and Puerto Rico bonds. UBS Puerto Rico brokers, especially, have come under fire for allegedly recommending customers concentrate their investments in UBS Puerto Rico products, even when they were not suitable for customers in almost any amount. Moreover, many of these investors have alleged that UBS encouraged them to borrow against their own accounts so that customers could invest more. For example, the firm’s financial representatives are accused of advising clients to leverage their accounts and use them as collateral, sometimes for the purposes of purchasing even more UBS investments. This is a practice that should have never happened.

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A Financial Industry Regulatory Authority panel has awarded five people $521,000 in compensatory damages in their Puerto Rico bond fraud case against UBS Financial Services (UBS) and UBS Financial Services Inc. of Puerto Rico (UBS-PR). The claimants had accused the financial firm of securities fraud, constructive fraud, common law fraud, negligent supervision, breach of fiduciary duty, and violating the Puerto Rico Uniform Securities Act.

UBS has been the subject of hundreds of FINRA arbitration claims brought by thousands of investors who sustained losses from Puerto Rico bonds and closed-end bonds, with many UBS-PR customers contending that they sustained massive losses because these investments were inappropriately recommended to them. To date, the financial firm has been ordered to pay or agreed to pay in settlements hundreds of millions of dollars to investors, with more claims still pending.

For over four years, our Puerto Rico bond fraud law firm has worked with investors on the island and the U.S. to help those investors recover their losses from losses in Puerto Rico securities. Contact Shepherd Smith Edwards and Kantas today to request your free, no obligation consultation.

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Deutsche Bank Securities Inc. and Deutsche Bank AG (DB) will pay a $30M civil penalty to resolve charges brought by the Commodity Futures Trading Commission accusing them of spoofing. According to the regulator, from at least 2/2008 through 9/2014, DB AG, with the help of a number of precious metal traders, sought to rig the price of precious metals futures contracts that were traded on the Commodity Exchange, Inc.

The CFTC’s order said that the traders worked alone and with each other to buy or sell these contracts while planning all along to cancel them before they were executed after a smaller offer was made on the opposite side of the market. The spoof orders were purportedly made to give the impression of market depth in order to generate trading interest.

The regulator found that through the traders’ actions, Deutsche Bank AG sought to not only rig the price of precious metals futures contracts but also to profit from these manipulations. The CFTC said the firm worked with one trader in Singapore who made orders and trades to “trigger customer stop-loss orders.”

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