UBS Financial Services Investor Wins $4.4 Million Arbitration from Losses in Puerto Rico Bonds

In March 2017, a UBS Financial Services customer won an award in a FINRA arbitration for compensatory damages in the amount of $3.9 million plus $442,000 in attorneys’ fees and $61,500 in costs from losses sustained in Puerto Rico municipal bonds and closed-end funds, as well as loans obtained against those closed-end funds and bonds.

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.

According to the award, the legal claims brought against UBS included: Securities Act violations; violation of the Puerto Rico Securities Act – 10 L.P.R.A. §890; and fault, fraud, deceit, recklessness and negligence. The causes of action relate to Claimants’ investment in Puerto Rico closed-end funds (“CEFs”) and Puerto Rico bonds; loans obtained against the Puerto Rico CEFs and Puerto Rico Bonds; and the use of lines of credit to purchase additional Puerto Rico bonds and CEFs. The FINRA arbitration hearing was conducted in San Juan, Puerto Rico.

This case is the just the latest in a long line of recent wins for former UBS customers who suffered losses due to unsuitable Puerto Rico Bonds. In February 2017, another UBS investor won a FINRA arbitration award in the amount of $9 million, also for losses from Puerto Rico bonds. In January 2017, another UBS investor won a $13.6 million FINRA arbitration from UBS for losses suffered from investments in Puerto Rico bonds. In December 2016, UBS lost a FINRA arbitration in the amount of $18.6 million from a former client for losses due to Puerto Rico bonds.

In one case against UBS, the client’s claims involved investments in Puerto Rico closed-end funds concentrated in Puerto Rico bonds. The Erez Law clients were awarded $2.5 million.

In Ciordia vs. UBS, Erez Law represented a beneficiary of a trust that sustained significant losses in UBS proprietary closed-end funds that invested predominantly in Puerto Rico bonds. Ciordia alleged that the broker, Carlos Rodriguez and UBS recommended an overconcentrated and unsuitable position in the UBS Puerto Rico funds. The FINRA panel awarded the Claimant $957,796. The FINRA Panel awarded attorney’s fees under the Puerto Rico Uniform Securities Act as well as costs.

Erez Law represents former UBS clients in numerous pending cases against the company. Erez Law recently filed a $17 million FINRA arbitration against UBS and Oriental Financial Services Corp. on behalf of a customer who alleges that her financial advisers, Juan Luis Gonzalez Rivera (CRD #2274031), William Serralles (CRD #2121621) and Xavier Aguayo (CRD #2926408), who were registered representatives of UBS and UBS Puerto Rico, and acted as a team to service the Erez Law client’s account, recklessly recommended that the client concentrate virtually all of the savings they entrusted to UBS/UBS-PR in high risk and unsuitable Puerto Rico bonds and UBS closed-end funds (CEFs) that held predominantly Puerto Rico bonds.

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 may be liable for investment or other losses suffered by its customers.

Erez Law represents investors in the United States and Puerto Rico for claims against UBS Financial Services and other brokerage firms for losses due to investments in Puerto Rico Bonds and funds that invested in Puerto Rico bonds. If you were a client of UBS Financial Services 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.

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