Recently, Puerto Rico filed for bankruptcy, which is the largest filing in U.S. Municipal history. Stoltmann Law Offices is interested in speaking to those clients who have invested with UBS in Puerto Rico closed-end municipal bonds. UBS and its brokers recommended and sold the bonds, which were closely tied to the performance of Puerto Rico’s economy and not suitable for all investors. Many of the brokers did not understand or disclose the risks associated with these bonds, which led to investors losing a lot of money. The UBS brokers also overconcentrated portfolios in these bonds, leading to losses as well. We are securities attorneys based in Chicago, Illinois who have represented dozens of clients who have lost money in Puerto Rican closed-end bond funds. Please call us today at 312-332-4200 for a free consultation with an attorney about whether we may be able to help you bring a claim against UBS in the Financial Industry Regulatory Authority (FINRA) arbitration forum on a contingency fee basis to help you recover your losses.
The newest UBS Puerto Rican bond case has awarded a former client $4.4 million, taking the client payouts to over $200 million. UBS has paid out $205.6 million in settlements and awards from 1,476 filings, according to the Securities Ligitation and Consulting Group. In the most recent case, Dr. Luis E. Cummings-Carrero, was awarded the money after his broker with UBS changed his repo financing into margin loans. UBS was downgrading the bonds a year before the municipal debt crisis hit, and Cummings-Carrero suffered losses because of it. He, along with many other UBS Puerto Rico bond clients were overconcentrated and faced unnecessary risk because of it. Since 2013, the bonds’ value have plummeted, leaving some 1,874 arbitration claims to be filed. UBS has accounted for 75% of the awards and settlements related to the sale of the junk Puerto Rican bond funds. If you were recommended Puerto Rican bond fund investments by your UBS broker, you may be entitled to recover those funds on a contingency fee basis. We sue UBS in the FINRA arbitration forum in order to recover investor money. Please call 312-332-4200 today to find out how to bring a claim against UBS. Attorneys are standing by.
Stoltmann Law Offices continues to investigate Ramiro Colon, a Miami, Florida-based broker with UBS Financial Services. Colon has received one regulatory sanction, one customer complaint and 24 pending customer complaints, according to the Financial Industry Regulatory Authority (FINRA). He has been accused of failing in a supervisory capacity, failing to supervise, and “failing reasonably to supervise an individual with a view to preventing and detecting the individual’s violations of federal securities laws from 2011 through 2013,”” among other violations. These are all against securities rules. Mr. Colon’s firm, UBS, may be liable for investment losses because the firm has a duty to reasonably supervise him. Please call us today at 312-332-4200 if you suffered Colon losses. The call is free with no obligation. We take cases on a contingency fee basis only.
Colon was registered with Citicorp Financial Services, First Chicago Capital Markets, Marketing One Securities, Popular Securities, R-G Investments Corp and UBS in Ponce, Puerto Rico from November 2006 until February 2015. He is currently registered with UBS in Miami, Florida and has been since November 2006.
UBS and other brokerage firms have already paid $226 million as a way of resolving damage claims tied to the sales of collapsed Puerto Rico bonds and bond funds. There have been 1,874 cases filed against the firms in arbitration since late 2013, and 42% have been completed through settlements or awards. Puerto Rico’s wealth management arm has paid out $142.6 million, or 63% of resolved claim payments made since the fourth quarter of 2013. They are respondents or defendants in 76% of the 1,083 claims still pending and have prevailed in five of the 25 arbitration decisions, according to a study done by the Securities Litigation & Consulting Group. Other brokerage firms with outstanding claims against Puerto Rico bond funds are Puerto Rico-based units of Merrill Lynch and Santander Securities, also Popular Securities and Oriental Financial Services Corp. Their parent companies are also based in the territory. If you were sold unsuitable closed-end Puerto Rico bond funds by your broker and brokerage firm, you may be able to sue the brokerage firm on a contingency fee basis to recover your losses. Please call 312-332-4200 to speak to an attorney for free about your options.
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.
UBS Rocked with Massive $18 Million Plus FINRA Arbitration Award For Fraudulent Sales Practices in Puerto Rico
UBS got hammered this week for $18 million because of various breaches of duties regarding its sale of poor performing Puerto Rican bonds. The Claimant in the case alleged breach of fiduciary duty, breach of contract, negligence, negligent supervision, unsuitable investments and strategy, failure to supervise and the failure to comply with the requirements set forth in the “Laws of Banks of Puerto Rico.” The causes of action relate to the Claimant’s investments in Puerto Rico closed-end mutual funds concentrated in Puerto Rico bonds heavily peddled by UBS brokers. The Panel awarded $12.7 million in compensatory damages, $2.5 million in interest, $163,000 in expert witness fees and $3.1 million in attorney fees. It is the largest award to date against UBS for the sales of the Puerto Rico bond funds. The entire award can be viewed at the link below.
According to a recent InvestmentNews article entitled “FINRA panel directs UBS to pay $750,000 for Puerto Rico Investment Damages,” the Financial Industry Regulatory Authority (FINRA) has ordered UBS to pay $750,000 as awards for damages tied to the island’s debt crisis continue to rise. Investors who claimed damages tied to their Puerto Rican debt investments, may be able to see $750,000 paid out by the bank’s AG wealth management business. The investors are Jose A. Rivera Riera, Desarrollos Jarra SE and Jenny Robles Adomo, who claimed fraud, recklessness and negligence concerning their investments in Puerto Rico bonds and closed-end funds. The investors are also seeking to recover commissions they paid the brokerage firm on top of damages. FINRA arbitration awards concerning investors who claim alleged negligence have climbed this year. For example, a FINRA arbitration panel ordered UBS to pay $470,000 to three investors who claimed damages because their accounts were over-concentrated in Puerto Rico bonds.
On Monday, the U.S. House of Representatives passed a bill that would take away exemptions from federal securities law for those offered in Puerto Rico and other U.S. territories that the Securities and Exchange Commission (SEC) administers in the U.S. Currently, Puerto Rico and the other territories have the ability to issue their own rules, Nydia Velazquez’s (D-NY) bill would be able to extend protections to citizens in the territories. The U.S. Territories Investor Protection Act of 2016, would apply federal rules to securities offered and issued only in the territories. Some of the reports have states that some issuers of securities in the country have basically become their own underwriters, packaging and selling securities without disclosing that conflict of interest.
The bill was passed on a bipartisan vote on Monday afternoon by voice, and ends one of the long-standing exemptions in the Investment Company Act for territorial securities. It also provides exemptions for closed-end investment companies, employees’ security companies and others. The bill is expected to help investors in securities get a better idea of the risks associated with them. The bill also builds a three year grace period for companies to comply with the new rules, as well as giving the SEC the power to extend that deadline. It also establishes a seven-member board with power over the island’s financial affairs, including the power to force sales of government assets and to revise budgets to line up with the board’s fiscal plan. It would also act as a gatekeeper for debtors seeking to restructure their debts in court. Only the board could decide who is actually a debtor and to file those cases in federal court. The Puerto Rican debt crisis recently showed these disclosure problems, when numerous citizens bought risky bond securities without being told how risky they actually were. This lead to the territory receiving some help, but the new bill does not provide Puerto Rico the ability to use Chapter 9 of the U.S. Bankruptcy Code, something for which the island officials had been hoping.
A UBS AG unit was ordered to pay more than $4.7 million to a customer’s former spouse who alleged that the bank improperly released accounts worth $12 million to her ex-husband even though the court ordered freezing those assets. David Efron was a Puerto Rico lawyer who withdrew all but $1.2 million over a nine-month period. Most of those funds were negotiable instruments that UBS was holding as collateral. When UBS released the accounts for Efron, he was in the middle of a divorce battle with his ex-wife. Around $800,000 of the remaining $1.2 million was used to repay a loan UBS made to Efron.
Puerto Rican bonds continued to plummet after Governor Alejandro Garcia Padilla signed a bill that would allow the commonwealth to suspend debt payments while awaiting help from Washington in dealing with the country’s ongoing financial crisis. The bill will allow moratorium on payments to keep government cash flowing for essential services. So far, Puerto Rico owes investors about $70 billion and has been struggling with economic stagnation and population decline for a decade. The island began defaulting on debt in August. Republicans in the US House of Representatives last week proposed a bill that would allow debt restructuring under supervision of a control board, and will decided whether the island has the right to craft its own process for municipal bankruptcy. The commonwealth’s Government Development Bank has a debt payment of about $400 million due May 1st.