{"id":1682,"date":"2015-07-27T23:37:52","date_gmt":"2015-07-27T23:37:52","guid":{"rendered":"https:\/\/www.stockbrokerfraudblog.com\/2015\/07\/ubs_warns_investors_to_stay_aw"},"modified":"2022-03-22T14:25:42","modified_gmt":"2022-03-22T19:25:42","slug":"ubs-warns-investors-to-stay-aw","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/ubs-warns-investors-to-stay-aw\/","title":{"rendered":"UBS Warns Investors to Stay Away from Puerto Rico Bond Funds"},"content":{"rendered":"

\t\t\t\tIn a complete turnaround, UBS AG (UBS) <\/a>is now telling clients to step away from Puerto Rico bond funds. Reuters<\/em> reports that in a recent letter, the firm’s Puerto Rico arm told clients that they would be contacted shortly regarding alternative investments. <\/p>\n

Reasons cited for the warning is that the funds can no longer be used as loan collateral in the wake of the U.S. territory’s financial woes. Puerto Rico is currently $72 billion in debt. Concerns over its economy were not eased when Governor Alejandro Garc\u00eda Padilla recently asked the island’s debt holders for help in postponing bond payments and restructuring the Commonwealth’s debt. <\/p>\n

Reuters<\/em> also reported that in the letter to UBS customers \u2013 issued on July 13 \u2013 UBS said the firm would lower the collateral value given to every Puerto Rico closed-end fund share to zero. However, noted the news agency, despite the declaration of zero value for the funds’ shares, the brokerage firm continues to list share prices on its website. <\/p>\n

UBS Puerto Rico’s decision to reject the funds as collateral shows just how high risk the firm now views these investments. According to Sam Edwards, a partner in Shepherd, Smith, Edwards & Kantas<\/a>, who is currently representing dozens of Puerto Rico investors, “UBS came up with the scheme to use the Closed-End Funds as collateral for loans from UBS Bank since they were not eligible for margin loans. It was that leverage against already internally leveraged losses that causes some of the worst losses on the island. UBS is now pulling the plug on its own plan and effectively admitting this was a faulty idea and not only too risky for investors, but now, too risky for UBS, who designed the plan in the first place.” <\/p>\n

Once again, the evidence appears to support that UBS is protecting itself at the expense of its customers.
\n Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In a complete turnaround, UBS AG (UBS) is now telling clients to step away from Puerto Rico bond funds. Reuters reports that in a recent letter, the firm’s Puerto Rico arm told clients that they would be contacted shortly regarding alternative investments. 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