Another Bit Hit For UBS Because of Puerto Rican Bond Fund Overconcentration: What Investors Can Do

Another arbitration claim was filed on Friday against UBS for its sale of closed-end Puerto Rican bond funds for $8.5 million. The firm continues to get hit with arbitration claims for its sale of the funds, which were not suitable for many investors. According to the most recent claim, the claimant entrusted assets to UBS in order to preserve capital. Instead, UBS concentrated the assets in Puerto Rico government bonds and Puerto Rico closed-end bond funds, which are leveraged and concentrated in the government bonds. The client was led to believe that the concentration of his assets were consistent with his low-risk tolerance. Instead, the concentration in these funds was chock full of excessive risk, given his investment objectives and risk tolerance. It is against industry rules for a broker to recommend, sell and/or over-concentrate a security if that does not coincide with the client’s risk objectives and tolerance. The broker has a duty to only recommend and sell those investments that are suitable for the client based on factors such as age, net worth and tolerance for risk. If he does not, his firm can be held liable for any investment losses the customer may sustain. UBS may be sued in the arbitration forum on a contingency fee basis because of their sale of the Puerto Rican bond funds and closed-end bond funds to help recover losses. Call us today to find out how.

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