UBS Puerto Rico Under Investigation for Alleged Fraud

UBS of Puerto Rico is allegedly under investigation for fraud by the Securities and Exchange Commission (SEC) and the U.S. Department of Justice. UBS, a Swiss bank, has had huge losses by its wealth management clients over the past few years causing a multitude of lawsuits. These lawsuits are claiming that allegedly UBS extended credit illegally to their clients so they could invest even more cash into the UBS bond funds.

UBS is likely to pay millions to settle the current lawsuits. The current investigation does not help UBS’s reputation in Puerto Rico, where it manages assets of around $10 billion for clients.

UBS had 132 brokers in five branches in Puerto Rico. They were managing approximately $10 billion in 2013. Puerto Rico has tax policies which made it attractive for millionaires around the world. However, in 2012, UBS paid the SEC $26.6 million for allegedly misleading investors. There were several problem with the operations of USBPR, some of which were selling investments to unsophisticated investors without informing them of the risks, many of these investors lost their life savings, a UBS broker was allegedly encouraging clients to take on loans illegally as credit lines, instead of margin loans, to invest in several products. These products were closed-end funds which invested in Puerto Rican municipal bonds and were managed by UBS itself.

Puerto Rico's economy was hit hard and the funds lost value quickly, resulting in investors losing millions. What is not known, and will be a part of the SEC's and Department of Justice's investigation, is how much the UBS management knew.

The ongoing problems and investigations will most likely cause additional payouts for UBS adding to the expenses of UBS’s Wealth Management Americas division.

An example of what happened to many conservative investors portfolios is written in an article titled, "UBS FACING LEGAL FIGHT OVER PUERTO RICO BOND FUNDS GONE SOUTH" by Bruce Kelly, of InvestmentNews, October 3rd, 2013. Securities attorney, Lars Soreide, of Soreide Law Group, PLLC, is quoted on the filing of a FINRA arbitration over the sale of UBS Puerto Rican Bonds:

"One plaintiff's attorney, Lars Soreide, said he filed a Financial Industry Regulatory Authority Inc. complaint against UBS Financial Services of Puerto Rico last week on behalf of a 70-year-old retiree whose portfolio of $500,000 was invested entirely in proprietary closed-end funds, along with individual municipal securities contained inside the funds she already owned.

She opened a line of credit with UBS that “she used to buy her home, and is now selling the portfolio to cover the equity line she took out,” said Mr. Soreide. “She relied on the income [fusion_builder_container hundred_percent="yes" overflow="visible"][fusion_builder_row][fusion_builder_column type="1_1" background_position="left top" background_color="" border_size="" border_color="" border_style="solid" spacing="yes" background_image="" background_repeat="no-repeat" padding="" margin_top="0px" margin_bottom="0px" class="" id="" animation_type="" animation_speed="0.3" animation_direction="left" hide_on_mobile="no" center_content="no" min_height="none"][from the municipal holdings] to pay for retirement, and UBS has been liquidating the holdings to pay interest on margin loans.”

The Financial Industry Regulatory Authority, also known as FINRA, allows individual investors to bring their own claims against UBS and their own broker.

Attorney Lars Soreide of Soreide Law Group, has been actively filing cases against broker/dealers for the substantial losses sustained by Puerto Rican bond investments. Call (888) 760-6552, for a free consultation if you've invested in Puerto Rico Bond Funds.

Also read (https://www.securitieslawyer.com/ubspuertoricofundloss.html)
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