Many investors have suffered substantial losses in the UBS Willow Fund. As such, The White Law Group is investigating the liability that broker dealers may have for selling the fund to some investors. The Willow Fund, launched in 2001, which at one time had nearly $500 million in assets, was liquidated following losses of 78% in 2012.
According to an Application of Deregistration filed with the Securities and Exchange Commision on Nov. 27, 2013, the Fund has no remaining assets and all assets were distributed to shareholders on a pro rata basis of ownership. Distributions were made on June 17, 2013 and November 18, 2013.
According to SEC regulatory filings, the 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. Many investors were given the impression that the fund was a low risk and relatively safe product.
In 2008 the fund’s portfolio manager allegedly changed the funds investment strategy and began investing in credit default swaps (CDS) on foreign sovereign debt. According to The New York Times, from 2006 to 2009, the amount of credit default swaps increased from 0.18% to 43% of Willow’s portfolio. What investors thought to be a relatively safe investment, was in fact an extremely high risk speculative investment.
In December 2012, a class action lawsuit was filed against the UBS Willow Fund alleging that the fund deviated from its disclosed investment strategy in debt securities without informing investors, and failed to adequately disclose the risk associated with credit default swaps. However, the class action was dismissed.
Investors who has suffered substantial losses are encouraged to consider filing a FINRA arbitration claim against the broker dealer that sold them the investment.
Based on what is known about the UBS Willow Fund, it appears that some broker dealers failed to perform adequate due diligence to detect that the changes made to the Fund’s investment strategy. As a result, the high degree of risk associated with the Fund may have been misrepresented to many investors.
Furthermore, broker dealers are required to make suitable investment recommendations that are consistent with a client’s age, risk tolerance, investment objectives, net worth, and investment experience. To the extent that some broker dealers may have overlooked suitability requirements and/or breached their fiduciary duty, they may be held responsible for investment losses in a FINRA arbitration claim.
To determine whether you may be able to recover investment losses incurred as a result of your purchase of UBS Willow Fund, please contact 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 dedicated to the representation of investors in FINRA arbitration claims against brokerage firms throughout the United States. The firm’s offices are located in Chicago, Illinois and Boca Raton, Florida.
To learn more about The White Law Group, visit www.WhiteSecuritesLaw.com.