UBS Wins $3.5 Million Arbitration Claim for Puerto Rico Client’s Estate

UBS won an arbitration case in which the estate of a deceased client sought $3.5 million in damages. The case was related to the firm’s sale of Puerto Rico closed-end funds and bonds. A Financial Industry Regulatory Authority (FINRA) arbitration panel ruled on a claim that Gabriel Cadenas’ estate was reduced to $1 million plus attorney’s fees. His estate also dismissed its own claims against three UBS employees. UBS rejected the allegations and asked the panel to dismiss all claims, according to the arbitration award. This was one of the few setbacks by UBS clients who have sued the firm for sales practices related to the closed-end bond funds sold by the firm. Last month, an arbitration panel ordered the brokerage firm to pay a former client $1.5 million. The client had originally sought $2 million in damages.

UBS Ordered to Pay $1.45 Million to Investor for Puerto Rico Bond Fund Case

On Thursday, securities arbitrators ordered UBS AG to pay an investor $1.45 million for losses incurred by Puerto Rico closed-end bond funds, according to a ruling. A Financial Industry Regulatory Authority (FINRA) arbitration panel found two UBS units liable in the case, which alleged securities fraud, misrepresentation and other misdeeds. Many of the funds lost half to two-thirds of their value between March 2011 and October 2013. They have not recovered since as the island remains under massive debts. UBS has had hundreds of claims filed against them, with a collective $1.5 billion at stake. Of those, the firm has resolved $284 million in claims through settlements or the full arbitration process. UBS in September of last year, agreed to pay almost $34 million to settle charges from the U.S. Securities and Exchange Commission (SEC) and FINRA. Both regulatory bodies claimed that UBS failed to supervise sales of the funds. Please call us today if you have claims against UBS for Puerto Rican bond fund sales. We may be able to sue the firm in the FINRA arbitration process.

Suing UBS for Puerto Rico Bond Fund Fraud

The Financial Industry Regulatory Authority (FINRA) recently announced that more fines need to be paid out in the Puerto Rican bond fund fraud. Allegedly, some financial institutions failed to properly supervise their employees trading bonds in Puerto Rico and downplayed the risk associated with the bonds. According to the Wall Street Journal, FINRA fined a unit of Spain’s Banco Santander $2 million for its part in the municipal bond sales, and the unit has agreed to pay $4.3 million in restitution to customers who lost money. This comes after the U.S. Securities and Exchange Commission (SEC) announced that FINRA reached an agreement with UBS Financial Services Inc. of Puerto Rico (UBSPR) to pay $34 million for failing to supervise a broker whose customers invested in mutual funds with money that was borrowed from a UBSPR-affiliated bank. In June, FINRA ordered UBS to pay $1 million to a Puerto Rican retiree, whose broker recommended he invest in the funds, even though they were not suitable for him.

If you invested in Puerto Rican bond funds, please call us at 312-332-4200. We are securities attorneys who represent dozens of investors who invested in the Puerto Rican bond funds and lost money. The call is free with no obligation. We are securities attorneys who help investors recover their money losses by suing UBS in the FINRA arbitration forum. Please call as soon as possible because time is of the essence with these types of cases. We take cases on a contingency fee basis only, so we only get paid if you recover money.

Legal Choices For Investors In Puerto Rico Electric Power Authority Bonds

The news continues to get worse for investors in the Puerto Rico Electric Power Authority bonds.  It now appears certain investors in the bonds will have their payments postponed or canceled in coming months for an indefinite period of time.  Because of this news, the Puerto Rico Electric Power Authority bond prices continue to plummet, declining from approximately 54 cents on the dollar invested to 40 cents on the dollar.  The government owned utility charges customers more than double the U.S. average because of its poor finances, including nearly $9 billion in debt from issuing bonds to upgrade and replace power generation plants.  Cash on hand has plummeted from $200 million down to $120 million.  Long term debt of the utility has increased from $6.8 billion in 2009 to $8.9 billion in 2013.  Brokers at firms like UBS, Merrill Lynch and Banco Popular aggressively sold these bonds to many conservative, income seeking investors who were looking for the sort of stability that typically comes with utility bonds.  Many investors sold these bonds may have an actionable claim and recover investment losses through the FINRA arbitration claims process or through a lawsuit against the brokerage firm who sold them the notes.  Actionable claims could include suitability, fraud and misrepresentation and omission claims.  In order to receive a free legal analysis on whether damages can be recovered for investments in the Puerto Rico Electric Power Authority bonds, please call our investment fraud law firm to hear all contingency fee options.

Psychology of a UBS Puerto Rico Bond Fund Fraud Victim

Many victims of financial fraud suffer great mental and emotional harm, as well as stress-related physical effects, in addition to their financial losses. Some of the UBS clients who purchased closed end Puerto Rico mutual funds fall into this category. Some of the UBS victims represented by our law firm in FINRA arbitration claims lost a substantial part of their life savings that took decades to build up in Puerto Rico. They feel robbed of not only their money, but also their security, their self-esteem, and their dignity. They may spend years trying to recover from these actions.

In past securities fraud cases we’ve handled, many of our clients detail their victimization as a “psychological mugging.” They have described their experience as “like being raped” and often experience the same loss of trust as sexual assault victims. Fraud victims may also experience: guilt; self-blame (often extremely high); shame; disbelief; anger; depression; sense of betrayal; sense of violation; isolation (“suffering in silence”); social indifference; social stigma (“victim-blaming”); loss of faith in the world and the system that was supposed to protect them; financial problems (due actual monetary losses, lost work, and/or identity theft); health problems (related to stress)

Financial fraud victims sometimes lack support from family and friends, who blame them or make fun of them for their gullibility. If a victim is elderly, family members may begin to doubt the senior’s ability to manage his or her financial affairs. This may result in the senior losing control over his or her finances and a loss of financial freedom. Fearing blame, many fraud victims do not disclose their fraud victimization to others, suffering alone or simply taking their loss and moving on. This can lead to isolation and depression.

In the profiling of fraud victims (comparing known victims of fraud to non-victims) certain trends emerge. Many of these traits are similar to those of the UBS clients we are representing who are suing UBS. For example…

-Investment fraud victims are more likely to be financially literate, married, male, have a college degree or more, earn $75,000 per year or more, and are more open to persuasive appeals;

-When asked simply, only 10-20% of investment fraud victims would acknowledge having been defrauded

-The secondary study of just investment victims was able to attain 62% acknowledgement using a series of progressive, investment-specific questions (p. 150).

-Investment fraud victims score high on financial literacy tests than non-victims. A major hypothesis going into the survey was that investment fraud victims do not know as much about investing concept as non-victims and would therefore score lower on financial literacy questions. In fact, the study found the exact opposite: investment fraud victim scored high tan non-victims on eight financial literacy questions.

-Investment victims are demographically quite different than non-victims. The present study finds that investment victims tend to have a difference demographic profile than the general population. Among them are gender (more men than women), living situation (less alone), marital status (more married), educational attainment (more educated), and income (higher levels of income).

-Investment fraud victims are more likely to listen to sales pitches. The literature on consumer fraud suggests fraud victims may make themselves vulnerable by their willingness to listen to sales pitches.

-Investment fraud victims are more likely to rely on their own experience and knowledge when making investment decisions. Earlier studies found that investment fraud victims tended to have a personality that was very self-reliant and self-deterministic. One study found investor victims had a higher “internal locus of control.” Meaning they felt their fate in life was all up to them.

-Investment fraud victims experience more difficulties from negative life events than non-victims. The study found that investment fraud victims do in fact experience more negative life events than non-victims. This finding supports the proposition that the presence of such life stress might contribute to an individual’s vulnerability to being victimized by fraud.

-Investment fraud victims are more optimistic about the future. In terms of psychological outlook, investment fraud victims were more optimistic than non-victims by virtue of their tendency to disagree with the statement, “in spite of what people say, the lot of the average person is getting worse, not better.

-Investment victims dramatically under-report fraud. The rates of self-identification ranged from a low of 20% to a high of 60% of respondents admitting they had been taken. This research affirms previous findings that surveys asking people to self-report their experiences as victims of fraud are likely to record rates significantly below the actual rates experienced due to under-reporting.

To learn more about suing UBS for Puerto Rican bond fund losses, please see