Articles Posted in Puerto Rico Bond Funds

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In another chapter of the continuing legal troubles facing UBS, AG and UBS Financial Services of Puerto Rico, Inc. (collectively “UBS”) for its marketing and sale of closed-end bond funds composed of Puerto Rican municipal debt (the “Puerto Rico Bond Funds”), two former UBS registered representatives, Jorge and Teresa Bravo (collectively, the “Bravos”), are suing the firm in an arbitration before the Financial Industry Regulatory Authority (“FINRA”) for its sales and management practices with respect to the Puerto Rico Bond Funds and are seeking $10 million in damages. Lax & Neville LLP has covered the developments in the Puerto Rico Bond Fund litigation extensively in our earlier blog posts and continues to investigate customer claims related to these investments. Links to those earlier posts may be found here, in chronological order: link 1, link 2, link 3, link 4, link 5.

The Bravos, who managed more than $ 120 million in client assets, were both senior vice presidents at UBS. According to news sources, the Bravos’ FINRA complaint alleges that UBS fraudulently maintained a conflict of interest, which it then concealed from its clients and the Bravos, in relation to its underwriting and marketing of the Puerto Rico Bond Funds. Through their FINRA complaint, the Bravos allege that UBS created a high-pressure environment to induce its registered representatives to sell more of the Puerto Rico Bond Funds to customers or risk being fired. The Bravos also allege that during that time, UBS cheated them out of money’s owed and ultimately forced them to leave the firm.

The UBS Puerto Rico Bond Funds have potentially cost investors billions of dollars in damages. If you have invested in the Puerto Rico Bond Funds with Jorge Bravo or Teresa Bravo, Contact Lax & Neville LLP today by calling 212-696-1999.

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Puerto Rico bond funds have been suffering massive losses recently and regulators have already taken action. According to the SEC, UBS Financial Services of Puerto Rico Inc. (“UBS”) misled thousands of its retail investors in 23 of its closed-end mutual funds. While UBS has already spent more than $26 million to settle the SEC’s charges, investors are now starting to pursue their own actions against the institution to recover potentially millions in losses.

Starting in 2008, UBS began soliciting investors in its Puerto Rico bond funds by promoting the funds’ market performance and high premiums to net asset value as the result of supply and demand in a competitive and liquid secondary market. However, UBS knew about a significant “supply and demand imbalance” and internally discussed the “weak secondary market.” UBS misled investors, failing to disclose that it controlled the secondary market. In 2009, UBS withdrew its market support and sold its inventory to unsuspecting customers. At the same time, it failed to disclose that it was drastically reducing its inventory, and undercut customer orders so that UBS’s inventory could be liquidated first.

Investors may have a host of claims against UBS including fraudulent misrepresentations and omissions, unsuitable investment advice, and failure to supervise.

Contact Information
New York Office
Empire State Building
350 Fifth Avenue Suite 4640
New York, NY 10118
Phone: 212-696-1999
Fax: 212-566-4531
Connecticut Office
2425 Post Road, Suite 200
Southport, CT 06890
Phone: 212-696-1999
Fax: 212-566-4531
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