Former UBS Client Wins FINRA Arbitration for $4.9 Million for Puerto Rico Bond Losses

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In July 2019, a former client of UBS Financial Services, Inc. and UBS Financial Services Incorporated of Puerto Rico won an award in a FINRA arbitration for compensatory damages for $4,813,161 plus $67,969.40 in costs and a $750 non-refundable portion of the filing fee for losses sustained from Puerto Rico bond investments.

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.

The causes of action included unsuitability; violations of federal securities acts; fault, fraud, deceit, recklessness and negligence; breach of fiduciary duty; breach of contract; vicarious liability; omissions; misrepresentations; and manipulation. The causes of action relate to the purchase of Puerto Rico bonds and shares of Puerto Rico closed end funds, and the use of unsolicited lines of credit to purchase more of these securities in Claimants’ accounts. The FINRA arbitration hearing was conducted in San Juan, Puerto Rico.

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 Incorporated 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.

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Author: Jeffrey Erez

The founder of Erez Law, Jeffrey Erez, focuses exclusively on securities arbitration and litigation. Mr. Erez passionately believes in representing aggrieved investors and obtaining justice for his clients through litigation.