March 6, 2018 Comments (0) Blog, Current Investigations, Securities Fraud

FINRA Awards UBS Clients $500,000 for Puerto Rico Bonds & CEFs

UBS Puerto Rico Bonds
(Last Updated On: March 6, 2018)

The White Law Group continues to Investigate Potential Claims involving UBS Puerto Rico Bonds and closed- end bond funds.

According to the Financial Industry Regulatory Authority Inc., an all-public arbitration FINRA panel has awarded five clients of UBS Financial Services more than $521,000 in compensatory damages in a case related to the clients’ investments in Puerto Rican bonds and closed-end bond funds (CEFs).

The five Puerto Rico residents claim that UBS violated the Puerto Rico Uniform Securities Act and engaged in securities fraud, common law fraud and constructive fraud, in addition to breaching its fiduciary duty and negligently supervising its personnel.

Compensatory damages in the following amounts were awarded to the following clients: Hector E. Rodriguez-Lopez, $87,411; Myrna L. Rivera Marengo, $19,221; Angel M. Cruz Colon and Carmen Ortiz Nevarez, $181,989, as well as an additional $5,056 to Ms. Ortiz Nevarez; William Rodriguez Reyes and Betzaida Hernandez, $223,814, plus $3,575 to Ms. Hernandez.

The clients originally asked for compensatory damages in the amount of $840,000 plus punitive damages, interest, costs, expert witness fees, FINRA fees and attorneys’ fees, but were denied by the panel.

Securities Investigation

The White Law Group continues to investigate the liability that UBS Financial has for recommending Puerto Rico Bonds and UBS Puerto Rico closed-end funds (“CEFs”) to investors. The firm has handled a number of claims involving UBS Puerto Rico closed-end funds.

In May 2017, Puerto Rico filed for bankruptcy protection in the largest municipal bankruptcy filing in history. The value of Puerto Rico’s municipal tax-free bonds has largely fallen as a result.

According to reports, UBS was the leading broker-dealer in Puerto Rico. UBS often concentrated its clients’ portfolios in its proprietary closed-end funds invested in Puerto Rico bonds as well as Puerto Rico bonds. The UBS CEFs were the single largest source of revenue for UBS.

According to the Financial Industry Regulatory Authority (FINRA), UBS allegedly failed to implement a reasonably designed system to identify and prevent unsuitable transactions in light of the unique economy of the territory.

Last year FINRA censured and fined UBS-PR $7.5 million for failures related to suitability of transactions in Puerto Rico closed-end fund (CEF) shares. FINRA also reportedly ordered UBS-PR to pay approximately $11 million in restitution to 165 customers who suffered losses on their CEFs.

UBS-PR allegedly failed to monitor the combination of leverage and concentration levels in customer accounts to ensure that the transactions were suitable given the customers’ risk objectives and profiles.

In October 2017, many UBS CEFs suffered a significant decline of approximately 20%, decreasing from around $10 to the $1-$3 range as of mid-November.

Brokerage firms, like UBS, have a responsibility to adequately supervise their employees and implement the necessary procedures and systems to detect misconduct. As such, The White Law Group continues to investigate claims against UBS Puerto Rico on behalf of investors in closed-end funds.

If you are concerned about your investment made with UBS involving Puerto Rico closed-end funds and would like to speak to a securities attorney, please call The White Law Group at 888-637-5510 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 Vero Beach, Florida.

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