In the fall of 2013, the value of Puerto Rico’s municipal bonds began to decline sharply. By the August of 2015, the Puerto Rican government had defaulted on some major bond payments.
This debt crisis may still not yet be over.
On February 1st, 2017, Reuters reported that the Puerto Rican government once again missed some major debt payments.
The Puerto Rico bond default has already cost many investors tremendous amounts of money. In many cases, these investor losses could have been avoided had brokers and brokerage firms lived up to their basic obligations. No retail brokerage firm was more involved in the selling of Puerto Rico bonds than was UBS.
UBS has long been one of the biggest brokerage firms that operates on the island. As it turns out, selling Puerto Rico’s municipal bonds, and related bond funds, to customers became quite lucrative for the global services financial giant.
Indeed, Bloomberg reports that UBS brought in hundreds of millions of dollars in commissions and investment fees in relation to Puerto Rico bond fund transactions.
UBS was the lead underwriter of many different municipal bonds funds. Specifically, some of the funds that UBS offered include:
Unfortunately, while these funds were lucrative for UBS, they were a disaster for investors. While UBS customers were looking for safe investments, many of these funds lost more than 50 percent of their initial value.
As a general rule, bonds are usually considered to be a relatively ‘safe’ investment. At least, bonds are usually far safer than are stocks. As such, many investors put more and more money into bonds as they approach and enter retirement.
However, this does not mean that bonds are without risk. All investments carry risks, and certain bonds can be quite risky. Customers have a right to know those risks ahead of time, so they can properly allocate their resources in accordance with their personal investment objectives.
UBS representatives consistently underplayed the risks associated with Puerto Rico’s bonds in order to increase their sales. In some cases, UBS sales representatives even encouraged their customers, often retirees or near retirees, to borrow money to up their investments. This led to situations where investors were instructed to put most, or even all, of their portfolio into Puerto Rico municipal bonds.
Not only were these not safe investments, but no investment is safe when you have all of your eggs in one basket.
If you are an investor who has sustained significant losses investing with UBS in Puerto Rico, you may be entitled to seek compensation for your damages. More specifically, if you now believe that you had an unreasonably largely percentage of your portfolio in UBS bonds, or if you borrowed money from UBS, you should speak to a qualified attorney today. Your claim deserves a comprehensive investigation.
If you were mistreated in any way by UBS or any other brokerage firm, you deserve full and fair compensation for your damages. The Sonn Law Group can help. Please call our office today at 1-877-959-6467 or use our online contact form to request a free, no-obligation review of your case.