UBS Reportedly Still Advising Brokers to Keep Selling Risky Puerto Rico Funds
UBS AG is still sticking to its guns and recommending that some clients buy risky Puerto Rico closed-end bond funds, in spite of the fact that hundreds of arbitration claims by investors who blame the securities for huge losses, according to an internal document earlier reported by Reuters.
UBS, which has about 130 advisers in Puerto Rico, reportedly told brokers that they may continue to recommend the funds to clients following a $5.2 million settlement earlier this month with Puerto Rico’s financial institutions regulator about sales practices involving the funds, according to an Oct. 9 internal memo.
$1.7 Million to Be Reimbursed to 34 “Low-net-worth” Seniors
Approximately $1.7 million of the $5.2 million settlement will go to compensate 34 “mostly senior, low-net-worth” clients. Said clients had a high concentration of their investment portfolio in the closed-end funds, which plummeted in value last year, according to an Oct. 9 announcement from the Office of the Commissioner of Financial Institutions of Puerto Rico. The remaining $3.5 million will reportedly go to support the commission’s investor education fund.
Client Risk Tolerance Was Put at Risk
Certain UBS brokers in Puerto Rico allegedly may have violated firm policies and potentially violated clients’ risk tolerance. The violations occurred from 2011 to 2013, when select UBS brokers in Puerto Rico reportedly “may have permitted or recommended” that clients, using their portfolio as collateral, take out loans through UBS Bank USA in order to purchase additional shares of the funds. In addition to the $5.2 million settlement, UBS also reportedly agreed to place six of its brokers involved under detailed supervision for six months to twelve months. The firm has about 130 advisers in Puerto Rico.
Investment Rights Lawyers Investigating
The Peiffer Wolf Carr & Kane investment rights lawyers often represent investors who lose money as a result of illicit investment recommendations. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.
Investors who believe they lost money as a result of an illicit investment recommendation may contact the investment rights lawyers at Peiffer Wolf Carr & Kane, Jason Kane or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at (585) 310-5140.