Sonn Law Group and Aldarondo & López Bras recently filed a claim against UBS Financial Services, Inc. and UBS Financial Services Inc. of Puerto Rico on behalf of a 71-year-old woman who has suffered approximately $1.7 million in losses stemming from several closed-end funds invested in Puerto Rico debt (“CEFs”). Aldarondo & Lopéz Bras is a separate law firm only licensed to practice law in Puerto Rico.
The woman owns and operates retail stores in Puerto Rico, and in 2005, sold property for $5 million. The woman, who has a 9th grade education, was an extremely unsophisticated and inexperienced investor with a conservative risk tolerance. She entrusted virtually all of her liquid assets to UBS, who overconcentrated her savings in leveraged and Puerto Rico-focused UBS funds and Puerto bonds, according to the Statement of Claim. As a result, the woman was exposed to a high degree of risk.
UBS allegedly failed to adequately disclose the illiquid nature of the UBS CEFs, the risks associated with the leverage used by the UBS CEFs, the risk of a reduction in the dividend payments of the Funds, the risks of concentrating the woman’s savings in speculative Puerto Rico debt, and the credit risks associated with the UBS CEFs due to Puerto Rico’s dismal financial and economic situation amongst other things, according to the Statement of Claim.
UBS compounded the risk to the woman’s savings by recommending in 2007 that she take a non-purpose loan from UBS Bank, rather than liquidate assets when the woman needed capital to invest in her business, according to the Statement of Claim. In September 2013, the securities which secured the loan plunged in value, thus compelling the woman to sell securities in excess of $1.5 million at a tremendous loss. The UBS CEFS which remain in the woman’s account are illiquid. That is, the woman is unable to sell the CEFS at her discretion at the price that UBS has published for the Fund.
Dozens of other investors have retained Sonn Law Group and Aldarondo & López Bras to pursue claims against the firms who sold the investments to them. While UBS dominates the island’s market through its UBS Family of Funds, some of which are co-managed with Popular Securities, Banco Santander (Santander Securities), Merrill Lynch, Raymond James, Oriental Bank and others also sold investments linked to Puerto Rico’s municipal debt. Claims for investment losses against UBS and other brokerage firms must be arbitrated through the Financial Industry Regulatory Authority (“FINRA”), the largest dispute resolution forum in the securities industry.
If you invested in UBS CEFS, were a client of UBS, or obtained a loan from UBS Bank, and have experienced financial losses, please call us at 844-689-5754 or complete our “contact form.” Sonn Law Group is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies.