Update on UBS Willow Fund Litigation

Monday, January 28th, 2013

The White Law Group continues to investigate investors’ litigation options involving the UBS Willow Fund.

According to SEC filings, the UBS Willow Fund was incorporated as a Delaware limited liability company, with its mailing address being 1285 Avenue of the Americas, New York, New York 10018.

The Fund’s Form N-Q dated November 28, 2012 indicates that the Fund (at least at the time of the SEC filing) was invested in the following investments (among others):  Loewen Group Intl., Collins & Aikman Product Co., Phosphate Holdings, International Automotive Components Group North America, Ormet Corp, and Yankee Candle Co.

The form also discloses a number of derivative contracts and credit default swaps, including credit default trades in Centex Corp, 5.25% (6/15/15), Lennar Corp, 5.95% (3/1/13),  Limited Brands, 6.125% (12/1/12), National Rural Utilities Corp., 8% (3/1/32), Pulte Homes, 5.25% (1/12/14), Southwest Airlines Co., 5.25% (10/1/14), and Toll Brothers, 6.875% (11/15/12) (among a number of others).

This form appears to confirm that the UBS Willow Fund was investing in credit default swaps.  A class action lawsuit filed in December 2012 alleges that the fund deviated from an announced strategy of investing in debt securities by trading in high-risk credit default swaps.

This same Form N-Q submitted by the UBS Willow Fund stated that “on October 15, 2012, the Board of Directors of UBS Willow Fund LLC approved the orderly wind down of the Fund. As such, the Fund is proceeding with a gradual disposition of its portfolio of investments. It is anticipated that this wind down will take place over a number of months. As a result of the wind down, subscriptions and repurchases into the Fund have been suspended.”

As such, it appears that investors in the UBS Willow Fund have suffered substantial losses.  One avenue to recover those losses is a FINRA arbitration claim against the brokerage firm that initially recommended the investment in the UBS Willow Fund.

Brokerage firms and financial professionals have a fiduciary duty to perform adequate due diligence on any investment they recommend.  Additionally, they have an obligation to make sure that any investment they recommend is appropriate for the client in light of the client’s age, income, net worth, investment experience, and investment objectives.

Given the complexities and risks of investing in credit default swaps, it does not appear that the firms that sold the UBS Willow Fund did perform the adequate due diligence or adequately disclosed the risks of the investment strategy implemented by the fund.

If you invested in the UBS Willow Fund and would like to discuss your litigation options, please call the securities attorneys at The White Law Group at 312-238-9650 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law from with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.  For more information on the firm’s UBS Willow Fund investigation, visit http://www.whitesecuritieslaw.com/2013/01/25/ubs-willow-fund-litigation-options/

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