Suing UBS for Puerto Rican Bond Fund Losses
Due to the continued decline of the commonwealth of Puerto Rico, coupled with its high unemployment rates, legislation that will subject the country’s mutual funds to the same regulations as mainland funds was introduced in the House of Representatives. Spearheaded by representative Nydia Velazquez, D-NY, the bill, the Puerto Rico Investor Protection Act of 2015, was introduced on Friday, where it was then referred to the House Committee on Financial Services for discussion. The co-sponsor of the bill was Representative Maxine Waters of California, the top Democrat on the financial services committee.
For years, Puerto Rico has faced a down economy and high unemployment rates, and continues to grapple with a $72 billion debt, which some say is un-payable. The introduction of the legislation calls upon a much-needed, more intense scrutiny of the investment crisis that continues to worsen. Velazquez was quoted as saying: “It is outrageous that, when investing their hard-earned money for retirement, Puerto Ricans are not afforded the same transparency requirements and consumer protections that apply in the mainland.” Her delegation, parts of Manhattan, Brooklyn and Queens, has the highest Puerto Rican population outside of the island itself.
Currently, mutual funds in the U.S. mainland are subject to the Investment Company Act of 1940. The law does not apply to U.S. possessions if funds are sold only to residents of those possessions. The country passed its own fund-oversight law in 1954, but this was less stringent than current federal regulations. UBS Group AG underwrote bonds from Puerto Rico municipal entities and then sold them to funds managed by the brokerage firm, collecting fees along the way. This structure of fund selling and underwriting would not have been legal on the mainland. So far, hundreds of investors have filed claims against the brokerage giant, with more than $1.1 billion in damages lost due to UBS activities. Many retirees who invested in the bond funds were told their investments would be safe, when, in reality, they were invested in just a few, small bonds that used leverage to boost returns and were high-risk in nature.
Stoltmann Law Offices is representing dozens of clients who lost money in Puerto Rican bond funds. If you lost money with UBS, please call our securities law firm as soon as possible at 312-332-4200 for a free consultation with an attorney. We may be able to help you bring a claim against UBS to recover your investment losses. There is no obligation and we take cases on a contingency fee basis only, which means we do not make money unless you recover. Please call soon as there is a statute of limitations with these types of cases.
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