Regulators Asked to Revoke Firm License of Puerto Rico UBS

The Office of the Commissioner of Financial Institutions (OCIF) has increased its urgency to suspend UBS’ operations in Puerto Rico, after a complaint was issued by six lawyers before the state financial regulator, and after the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) accused the firm and one of its former managers, Ramiro L. Colon for failing to carry out supervision duties, which resulted in investment losses for hundreds of clients. A Puerto Rico-based UBS broker, Jose G. Ramirez, was also accused of fraud in the sale of mutual funds and credit lines. Both FINRA and the SEC substantiated the need for the OCIF to apply current law and revoke UBS’ license in Puerto Rico because of the massive losses. So far, the SEC’s and FINRA’s investigations have resulted in fines and restitutions of about $34 million. In a document issued by the attorneys it states: “It is evident that with the power that the OCIF have to issue licenses and revoke them by virtue of the laws it administers, while tending to a pattern of fraudulent behavior displayed by both UBS-AG and its subsidiaries UBS-PR and UBS (Financial Services or UBS-FS) which has already been made known to an extensive audience, it turns out to be highly necessary to look after the presented complaint in order to reach a determination regarding the immediate suspension of all registrations given to these institutions in order to do business in Puerto Rico.”

In June of this year, the group of lawyers asked for the revocation of UBS Puerto Rico’s licenses after its parent company, UBS-AG, pleaded guilty in the federal district court in Connecticut for a serious charge of electronic fraud. For this, UBS paid a fine of $203 million and accepted a probation period of three years. In the attorney’s opinions, UBS should not continue doing business in Puerto Rico, and they are suggesting that the OCIF would be able to suspend or revoke any license of a stockbroker who has been convicted for a lesser crime related to securities transactions or for any “serious crime.” In 2014, the OCIF accused UBS of non-compliance in their duty to sell closed mutual funds to people whose risk profiles were not consistent with the features of the stocks. The OCIF set a fine and restitution of $5.2 million to 34 clients. It gave the bank a period of six months to identify other clients of the firm that fit the profile of aggrieved investor and to reimburse their money. UBS has still not concluded this order.

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