Miguel Ferrer, Former UBS Puerto Rico Chairman, Transcript on Selling Puerto Rican Bond Funds

On June 2nd, 2011, Miguel Ferrer, the then-chairman of UBS Financial Services Inc. of Puerto Rico, a unit of UBS AG, held a meeting in San Juan and ordered his brokers to aggressively sell Puerto Rican bond funds. Before the meeting, most brokers would not sell the bonds, claiming they were too risky. Allegedly, the funds suffered from low liquidity, excessive leverage, oversupply and instability. The funds were loaded in debt of the Puerto Rican government and underwritten by UBS. Ferrer held the meeting and strong armed the brokers to sell the risky funds, stating that they were falling behind in gross production. Now, hundreds of investors are bringing FINRA claims against UBS in the Financial Industry Regulatory Authority (FINRA) forum in hopes of recovering investment losses. Some of Ferrer’s statements are transcribed below:

 

“Like we all know, our gross product is down more than 40%. Not all have suffered, but in general we are very bad.”

 

“We have a ton of product available, but what happens is that we are trying not to touch it and we find ourselves that we are in a situation where we have a lot of product available or inventory that is mostly the mutual funds and the local bonds that stink…”

 

“So bonds are placed there..for local bonds you are screwed and we will not see almost no transactions here while the market is unfavorable. So we have to do something about it.”

 

“We have to cross the bridge between demand of insatisfaction of our clients and yours, for products and the products available. If not, get another job.”

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