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UBS Ordered to Pay Investor Over $150K In Puerto Rico Bonds and Closed-End Bond Fund Case

UBS Loses Another Puerto Rico Bonds & Closed-End Fund Case

More than six years after thousands of investors lost many millions of dollars from investing in Puerto Rico bonds and closed-end bond funds, UBS Puerto Rico (UBS-PR) is still being held to account for the financial losses faced by many of its clients. 

This includes one claimant who was recently awarded over $150,000 in compensation plus interest, other costs, and fees in her Financial Industry Regulatory Authority (FINRA) arbitration case against the firm.  

The investor, who filed her claim against both UBS Financial Services and UBS-PR alleged fraud, recklessness, violation of the securities laws, and negligence against the firms. 

UBS Puerto Rico: An Ongoing Investigation 

UBS-PR has been one of the primary targets of the thousands of FINRA arbitration claims filed on the island in the last six years. 

At the time of the Puerto Rico bond collapse in the fall of 2013, UBS-PR was the largest brokerage firm and investment bank on the island and managed roughly half of the investment accounts in Puerto Rico. 

UBS-PR used this influential position to push its clients into local Puerto Rico bonds and UBS’s own proprietary bond funds, rather than to appropriately diversify them. Also, there is evidence that even as the Puerto Rico bond market was headed for trouble – and UBS’ own executives knew this – the firm pressured its brokers to keep selling the investments without regard to their customers’ best interests. 

Many of these investors should never have even invested in the Commonwealth’s securities, to begin with, because the bonds were always too risky and unsuitable for their portfolios. Yet, UBS-PR and other brokerage firms continued to make money from selling these risky investments. 

When the market did plunge in late 2013, many investors including retirees, mom and pop businesses and other investors who thought they had invested in safe, low-risk securities that gave them tax breaks were blindsided by the losses they suffered — with some of them losing everything. 

It hasn’t ended that Puerto Rico ended up mired in $70 billion of debt and was forced to file for bankruptcy-like protections to restructure more than $120 billion of bonds and pension obligations. 

Firms Involved In the UBS Puerto Rico Scandal 

In August, UBS Securities and UBS Financial Services were among the banks that MBIA Inc., a bond insurer, sued for underwriting the billions of dollars of Puerto Rico bonds that ended up defaulting. 

In its lawsuit, MBIA accused the two UBS entities, as well as the following firms of having “inflicted a financial tragedy” on the Commonwealth. 

  • Goldman Sachs (GS)
  • Citigroup
  • JP Morgan Securities 
  • Merrill Lynch
  • Pierce, Fenner and Smith
  • Santander Securities
  • RBS Capital Markets 

Many of these banks have been named in investors’ fraud cases for marketing and selling the securities to them. 

Puerto Rico Bond Fraud and Closed-End Bond Fraud Lawyers 

At Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm), our UBS Puerto Rico bond fraud lawyers have been hard at work on the island and the mainland in helping investors recoup their losses. 

Already, we have helped a number of clients recover millions of dollars. This includes a $10M award for one former customer of UBS-PR. We also have successfully pursued Puerto Rico bond fraud and closed-end bond fraud cases against other brokerage firms on the island and on the mainland. 

Contact our Puerto Rico bonds fraud lawyers at SSEK Law Firm today and receive a free, no-obligation case consultation.

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