After evidence of fraudulent practices emerged in court, the wealth-management fund UBS was ordered by the Financial Industry Regulatory Authority (Finra) to pay $2.9 million to two investors who had put money into UBS Puerto Rico Bond Funds. The plaintiffs’ legal fees were included in the damages awarded by the arbitration panel.
This case, the latest in a series of lawsuits against UBS by investors who claim they were defrauded or led astray by the firm, is a major victory for the various parties filing suit against UBS.
For several years, UBS Puerto Rico encouraged its customers to invest in several leveraged bond funds mostly consisting of bonds floated by the Puerto Rican government. While these funds did quite well when Puerto Rico’s economy was flourishing, the investment risk was much higher than any investment options you would normally find in a moderate or low-risk fund. And when Puerto Rico’s economy tanked in the early part of the decade, investors lost hundreds of millions of dollars.
Additionally, several employees of UBS Puerto Rico sold bond funds using dubious sales strategies, telling customers to take out lines of credit in order to pay for the bond funds. This left UBS’s customers exposed to more risk than is usual in such transactions, which are usually paid for through a financial device known as a margin loan.
The additional risk taken on by using a line of credit to invest in bonds exposed customers to even deeper losses.
The attorneys at Long & Long are willing to represent any investors in UBS Financial Services’ Puerto Rico bond funds. If you have done business with UBS in the last few years and believe you may have invested in Puerto Rican bond funds, contact us today for a free case review, or call us at (251) 432-2277.