In October 2018, a client of UBS Financial Services Inc. and UBS Financial Services Inc. of Puerto Rico won an award in a FINRA arbitration for compensatory damages for $435,623.33 plus 4.75% per annum, $26,936.49 in costs, and $102,000 in attorney fees for losses sustained from investments in proprietary UBS closed-end funds invested in Puerto Rico bonds. The UBS client is also entitled to rescission (UBS must buy back) of his illiquid closed-end funds.
The investors were clients of financial advisor Alexandra Amador (CRD# 3130211). Amador was registered with UBS Financial Services Inc. and UBS Financial Services Incorporated of Puerto Rico in San Juan, Puerto Rico from 1998 to 2014. Amador herself sued UBS for misleading her in regards to the Puerto Rico closed-end funds. She settled her case for an undisclosed amount.
This is the 5th consecutive award that Erez Law has won against UBS for Puerto Rico investors.
The causes of action included breach of fiduciary duty; negligence; negligent supervision; fraud; breach of contract; breach of contract — third party beneficiary; violation of the Puerto Rico Uniform Securities Act; and violation of Sections 10(b) of the Securities Exchange Act and Rule 10b-5 of the Securities and Exchange Commission. The causes of action relate to Claimant’s investments in Puerto Rico municipal bonds and closed-end bond funds. The FINRA arbitration hearing was conducted in San Juan, Puerto Rico. It is alleged that UBS and Amador recommended an unsuitable and over-concentrated investment in high risk Puerto Rico funds.
Puerto Rico suffers from long-term financial and economic deficiencies that rendered its credit increasingly more speculative. The deterioration of Puerto Rico’s financial condition culminated in its debt being downgraded to junk status or speculative (below investment grade). For the past several years, Puerto Rico has been struggling with compounding debt and economic decline. As a result, the value of Puerto Rico’s municipal tax-free bonds has considerably fallen. Since September 2013, when the steep decline in Puerto Rico bond values began, investors holding these bonds have suffered massive losses. In May 2017, Puerto Rico filed for bankruptcy protection from creditors in what is being described as the largest municipal bankruptcy filing in history.
“This award is significant because it represents nearly 100% of the investors’ capital losses, plus costs, attorney’s fees and rescission,” says Jeffrey Erez, Esq.”
In addition to the case above, Amador has received 31 additional customer complaints between 2001 and 2018, most regarding losses due to investments in Puerto Rico bonds. Some recent complaints include:
- October 2018. “Time frame: Unspecified Allegations: Claimants allege their investments in Puerto Rico closed-end funds and government bonds were unsuitable, over-concentrated, and misrepresented as safe investments.” The customer is seeking $15 million in damages and the case is currently pending.
- September 2018. “Time frame: 2008-present. Allegations: Claimants allege their investments in Puerto Rico closed-end funds and municipal bonds were unsuitable, over-concentrated, and misrepresented as safe investments.” The customer is seeking $670,000 in damages and the case is currently pending.
- June 2018. “Time frame: 2009-Present Allegations: Claimants allege that they were damaged as a result of unsuitable investment advice to purchase and hold Puerto Rico Closed End Funds. They further allege misrepresentations were made regarding the Funds’ risk and that their accounts were over-concentrated.” The customer is seeking $339,000 in damages and the case is currently pending.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, UBS Financial Services Inc. and UBS Financial Services Inc. of Puerto Rico may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.