The Securities and Exchange Commission recently announced that UBS Willow Management LLC and UBS Fund Advisor LLC agreed to pay $17.5 million to settle charges for their roles in failing to disclose investment strategy changes in the UBS Willow Fund, LLC. More than $13 million of the settlement will be returned to harmed investors.
The UBS Willow Fund was a closed-end fund that set out to invest primarily in distressed debt securities. The Fund performed well on a portfolio of bank loans, corporate bonds and corporate repurchase agreements through 2006. According to the SEC announcement, the fund used a strategy consistent with the strategy described in the offering materials through 2008.
However, in 2008 the UBS Willow Fund began to incur big losses after UBS Willow Management changed the course of the fund and purchased large quantities of credit default swaps. The losses rose from less than 2.6% in 2008 to more that 25% of the funds market value in 2009.
The SEC alleges UBS Willow Management did not provide adequate disclosure of the strategy changes to the fund’s board of directors or investors. Investor letters sent between 2008 and 2011 allegedly contained false or misleading information about the funds default swaps.
“The SEC’s order finds that UBS Willow Management negligently violated the antifraud provisions of the federal securities laws and that the UBS Fund Advisor failed to supervise UBAS willow Management.”
The foregoing information, which is publicly available here, is being provided by The White Law Group.
If you suffered losses investing in UBS Willow Fund LLC and would like discuss your litigation options, please call the securities attorneys of The White Law Group at (888)637-5510 for a free consultation.
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