On Tuesday, UBS Wealth Management Americas reported that their pretax profits plummeted 94% year-over-year as the firm racked up millions in litigation and recruiting expenses. UBS stated that its wealth management unit brought in $300 million in pretax profits. The bank’s sale of Puerto Rico bonds and closed-end funds cost the firm approximately $284 million in the form of settlements or arbitration awards. UBS said its aggregate client complaints add up to $1.5 billion. The Department of Justice is also allegedly conducting a criminal inquiry into the impermissible reinvestment of non-purpose loan proceeds. UBS also expanded its advisor ranks by 151 Fas during the fourth quarter, raising its total advisor force to 7,140. Many of the new recruits joined from Credit Suisse, and because of this aggressive recruiting, the bank’s expenses were raised and recruitment loans to financial advisors increased 9% to $3.179 billion. UBS also stated that the recruiting and strong growth from existing advisors helped boost net new money for the quarter, which rose to $16.8 billion from $5.5 billion from the year-ago period.
According to a CNN.com Money article, Puerto Rico’s government must pay about $1 billion to its creditors on January 4th to avoid defaulting for the second time since August. The country’s debt is still almost $73 billion, according to Moody’s. This July 1st, Puerto Rico did make a $1 billion payment, avoiding default at the time, but in August of this year, the island defaulted on a small portion of its debt, and things have gotten worse since then. The August default was the first in history and that debt was owned by ordinary Puerto Ricans. In January, Puerto Rico must pay $332 million in general obligation bonds, ones that have the most legal backing.
Since 2006, the island has been in a recession. The unemployment rate is 12.5%, which is twice the national average. Many Puerto Ricans have been forced to move to the mainland of the U.S. in order to find employment, and the shrinking population hurts the island’s tax base, which it uses to pay off debt. Puerto Rico then upped spending for schools and maintained a costly energy policy of importing crude oil. Many government employees are owed pension payments which adds to its monetary troubles. Unlike the mainland, Puerto Rico does not have the option of entering into Chapter 9 bankruptcy, and much of the island’s debt doesn’t qualify for Chapter 9; instead it must negotiate with individual creditors, not all together.
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.
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.
Stoltmann Law Offices is investigating Antonio A. Lopez Villafane, a current broker with UBS in Puerto Rico. He is accused of selling UBS proprietary closed-end Puerto Rican bond funds, which were heavily invested in Puerto Rico’s municipal bonds. These bonds have suffered devastating losses over the past year, and Stoltmann Law Offices is currently representing dozens of clients who have lost money in the bond funds. UBS can be held responsible for losses because they had a duty to reasonably supervise their brokers who sold the funds. Brokers also have a duty to recommend suitable recommendations to their clients, based on their age, net worth, investment strategy and savvy, and if they do not, is a violation of securities rules and regulations.
Villafane is registered with UBS Financial Services in San Juan, Puerto Rico and has been since February 1991. He has 33 customer disputes against him, 25 of which are currently pending, according to his Financial Industry Regulatory Authority (FINRA) BrokerCheck report. Please call our Chicago-based law firm at 312-332-4200 as soon as possible, because time is of the essence. The call is free with no obligation. We take cases on a contingency fee basis only, so we only get paid if you recover money.
The Financial Industry Regulatory Authority (FINRA) ordered a unit of Spain’s Banco Santander SA to pay $6.4 million in settlement because of alleged supervisory failures tied to the sale of Puerto Rican municipal bonds. FINRA also alleged that the unit failed to reasonably supervise employee trading at the firm’s Puerto Rico branch. The unit also was fined for the sale of individual Puerto Rico bonds and closed-end funds. $4.3 million of the money will be paid to certain customers as restitution and $121,000 will be paid in restitution and an offer to buy back the securities sold to certain customers who were affected by the firm’s failure to supervise employee trading. Allegedly, for a 10 month period beginning in December 2012, Santander didn’t accurately reflect the dangers associated with the Puerto Rican paper in its risk-classification tool and failed to adequately supervise its customers’ use of margin and concentrated positions in their accounts. Since 2010, Moody’s Investors Service’s downgraded some of the island’s municipal bonds to just above junk status, being sold by customers and accelerated efforts to dump its inventory. This comes after a unit of UBS’ Group AG in September agreed to pay $34 million in settlements because of the sale of Puerto Rican bond funds.
Stoltmann Law Offices is currently representing dozens of investors who invested in Puerto Rican bond funds and lost money. If you or someone you know invested in the bonds, please call our securities law offices in Chicago at 312-332-4200. Please call soon as time is of the essence with these cases. The call is free with no obligation. We sue firms such as UBS on a contingency fee basis only.
The Securities and Exchange Commission (SEC) charged Ramiro L. Colon III and UBS Puerto Rico for failing to supervise a former broker who had customers invest in Puerto Rico affiliated mutual funds using borrowed money from an affiliated bank last week. Colon was the former branch manager of UBS. The SEC also filed a complaint in federal court against Jose Ramirez Jr., (also known as Chave Ramirez, Jose G. Ramirez Jr., Jose Jr. Ramirez and Jose G. Ramirez Arone) a former registered representative in UBS’s Guaynabo branch office. They allege that he increased his compensation by $2.8 million by having certain customers use proceeds from lines of credit with UBS Bank USA to purchase additional shares in the closed-end mutual funds. Allegedly, Ramirez instructed the bank’s customers to transfer money from their credit lines to an outside bank account before moving them to UBS to purchase the closed-end Puerto Rican bond funds. The bond funds then decreased in value significantly. UBS agreed to settle the SEC charges by paying $15 million in disgorgement, interest and penalties. Colon agreed to pay $25,000 and was suspended from the industry for one year.
According to the SEC complaint, Ramirez lied to customers about the safety of the funds and about the risk of investing in them with borrowed money. He also allegedly lied to his branch manager about the transactions. He was terminated from UBS in January 2014. UBS was found to have not reasonably supervised Ramirez, after becoming aware of his wrongdoings on at least two separate occasions. UBS was also found to have no system in place to monitor the transactions that were taking place outside of the bank. Colon was found to have allegedly not taken proper actions or precautions when notified of Ramirez’s activities. He also allegedly did not properly investigate the allegations presented to him regarding Ramirez.
According to his Financial Industry Regulatory Authority (FINRA) BrokerCheck report, Jose Ramirez Jr. was registered with Painewebber Incorporated in Weehawken, New Jersey from June 1986 until August 1988, Prudential Securities Incorporated in New York, New York from February 1990 until February 1997, UBS Financial Services in San Juan, Puerto Rico from March 1997 until February 2014 and UBS Financial Services in Guaynabo, Puerto Rico from March 1997 until February 2014. He has 65 customer disputes against him, 57 of which are currently pending. He is not licensed within the industry and FINRA permanently barred him from acting as a broker or otherwise associating with firms that sell securities to the public.
Stoltmann Law Offices is a securities law firm that is currently representing dozens of investors in their claims against Jose Ramirez Jr. and UBS. UBS can be held liable for investment losses because the bank failed to supervise its managers and its representatives. If you lost money in UBS’s Puerto Rican closed-end bond funds, please call us immediately at 312-332-4200. Time is of the essence in these sorts of cases. The call is free with no obligation. We take cases on a contingency fee basis only, which means we do not make money unless you recover money. We sue UBS in the FINRA arbitration forum.
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.
More good news for burned UBS AG investors in Puerto Rico. The firm this week lost yet another FINRA arbitration claim to a burned investor. The firm was ordered this week to pay two investors $2.9 million for losses incurred because of Puerto Rico municipal bonds. The Financial Industry Regulatory Authority (FINRA)’s arbitration claim claimed fraud, breach of fiduciary duty, negligence, breach of contract and unsuitability, among other things. The claim was filed by Ana Teresa Lopez-Gonzalez and Andres Ricardo Gomez, investors who invested in UBS-managed closed-end funds and other Puerto Rican municipal bonds and the use of these investments as collateral for borrowing. Other family members were listed as claimants and settled for an undisclosed amount. The group was seeking $10 million in damages, plus other amounts.
The FINRA arbitration panel awarded the investors $2.4 million in damages, plus interest, along with more than $534,000 in legal and other costs. The panel also denied a counterclaim UBS brought against them. In a similar situation, UBS was ordered to pay about $2.5 million to a San Juan couple who had up to $6 million in damages and the bank also paid almost $1.5 million out of $5.8 million requested to investors in three other cases to Puerto Rican bond fund investors earlier this year. If you lost money in Puerto Rican bond funds, please call us immediately at 312-332-4200 for a free consultation with an attorney. We are securities fraud attorneys based in Chicago, Illinois who have dozens of claims against UBS for their sale of Puerto Rican bond funds. We take cases on a contingency fee basis so we do not get paid unless you recover.
UBS Financial Services was fined $750,000 by the Financial Industry Regulatory Authority (FINRA) over the misclassification of municipal bond interest payments. FINRA claimed that UBS paid out $1,165,000 in tax-free interest to 4,371 clients who held municipal bonds from July 2009 through December 2013. But UBS was actually short on the bonds, so the interest came from them directly and was taxable as ordinary income. The bank “agreed in principal with the IRS to make a payment to relieve its customers of the burden of filing amended tax returns and paying additional federal income tax.” If you invested money with UBS, you may be able to recover some of that money by suing them in the FINRA arbitration process. Please call our securities law offices based in Chicago, Illinois at 312-332-4200. The call is free with no obligation.