News, another class action lawsuit was filed against UBS regarding the sale of Puerto Rico bond funds. However this is one of the first class actions to claim that UBS Ag’s wealth management group violated its fiduciary duty when selling proprietary products included in the UBS Puerto Rico Family of Funds. The claim also brings up the high commissions and fees earned by UBS. The class action is alleging damages in excess of $5 million dollars.
Investment News reports,”UBS marketed the tax-free investments as secure ‘fixed income’ securities that would preserve investors’ principal, when in fact the funds were highly volatile and contained a large portion of bonds that UBS had underwritten, according to the complaint.” According to the report, the class action alleges that UBS collected over $200 million in underwriting fees between 2008 and mid-2013, and earned approximately $50 million in managing fees for the funds. Furthermore, the complaint alleges UBS made around $500 million in loans from clients that were encouraged by UBS advisors to borrow against their brokerage accounts and invest more in the funds, reported by Investment News.
Countless investors who were recommended UBS Puerto Rico bond funds suffered devastating losses when Puerto Rico’s municipal bond market bottomed out. Many investors, especially those with portfolios over-concentrated in the funds, incurred devastating losses. The White Law Group recently filed a FINRA arbitration claim on behalf of one investor who lost more than $450,000, and continues to investigate claims on behalf of other investors.
Broker dealers have an obligation to make “suitable” investment recommendations. The client’s net-worth, risk tolerance, age, and investment objectives must be taken into consideration. In addition many advisors had a fiduciary duty to act in the best interest of their clients. When brokers overlook suitability requirements or breach their fiduciary duty they may be liable for investment losses.
If you invested in a UBS Puerto Rico Fund and would like to speak to a securities attorney about recovering your investment losses through a FINRA dispute resolution claim, please call The White Law Group at 312-238-9650 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.