October 31, 2013 Comments (0) Blog, Securities Fraud

Update on SEC Charges Against UBS of Puerto Rico Executives

(Last Updated On: July 17, 2015)

The White Law Group continues to investigate potential claims involving the UBS Puerto Rico Bond crisis and to file claims on behalf of investors who have suffered losses as a result of their investments in the UBS Family of Puerto Rico Funds.

According the The Bond Buyer, Chief administrative law judge, Brenda P. Murray, dismissed the Securities and Exchange Commission’s charges filed against two principles, Miguel Ferrer and Carlos Ortiz, of UBS Financial Services of Puerto Rico for allegedly making misleading statements to investors, concealing a liquidity crises and masking UBS’ control over the secondary market for the 23 proprietary closed-end mutual funds. The SEC was unable to prove that the two principles allegedly misleading statements were made with the intent to deceive or with negligence.

According the The Bond Buyer, judge Murray wrote “Their is not one bit of evidence that UBS PR, Ferrer, and Ortiz engaged in a course of conduct to mislead or scheme to mislead investors by hiding or disguising the fact that UBS PR was in a period when it was not buying fund shares and was reducing fund share prices.”

Notwithstanding the Judge’s findings, UBS PR had already settled these charges with the SEC for $26.6 million. The SEC alleged that UBS PR was aware of significant “supply and demand imbalances” and discussed the “week secondary market internally.” The SEC also alleged that the firm failed to disclose that it controlled the secondary market and increased their investor holdings in the closed-ends funds to keep up the appearance of a stable market. The trouble for UBS arose, according to the SEC, when the firm later withdrew its market price and liquidity support in order to sell 75% of its inventory to investors.

Brokerage firms that sold UBS proprietary closed-end mutual funds have a fiduciary duty to make investment recommendations that are in the best interest of their clients and must take into consideration a client’s risk tolerance, financial objectives, investment experience, age, and net worth in order to make appropriate investment recommendations. If a brokerage firm recommends an unsuitable investment they may be liable and investment losses may be recovered in a FINRA dispute resolution claim.

If you are concerned about your investment in a UBS Puerto Rico Fund and would like to speak to a securities attorney about whether you have a potential FINRA dispute resolution claim, please call The White Law Group’s Boca Raton, Florida office at 561-807-6804 for a free consultation.

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

For more information on The White Law Group, please visit our website at www.WhiteSecuritiesLaw.com.

-->