FINRA Sanctions UBS Puerto Rico $18.5 Million


FINRA Sanctions UBS Puerto Rico $18.5 Million

Problems continue for UBS Puerto Rico, with the Financial Industry Regulatory Authority (FINRA) announcing that it has fined UBS Puerto Rico $7.5 million for supervisory failures related to the suitability of certain closed-end fund transactions and an additional $11 million in restitution to approximately 165 customers.

FINRA found that for more than four years, UBS PR failed to monitor its clients’ accounts to ensure that the concentration levels of account assets was suitable, i.e., consistent with each client’s risk profiles and objectives. Instead, FINRA found that UBS PR customer accounts were over-concentrated in UBS’s risky Puerto Rico bond funds. Despite UBS’s knowledge of this practice, it still failed to adequately monitor concentration and leverage levels.

UBS PR also was fined for soliciting customers to open lines of credit collateralized by the risky UBS PR bond funds. If the account value dropped below a certain level when the bond funds dropped in value, customers were asked to deposit additional funds to meet margin calls. Generally speaking, when a line of credit is collateralized in a diversified account, you have the option to liquefy one of several assets to meet a maintenance call; however, the risk of loss intensifies when you lack diversification. When the market caused the shares to plummet in 2013, many customers suffered heavy losses they may not have otherwise endured if UBS had monitored customer accounts properly.

Contact Us Today

The attorneys at Dimond Kaplan & Rothstein, P.A. continue to aggressively pursue claims on behalf of investors who have lost money in the UBS Puerto Rico bond funds. DKR’s lawyers have helped recover more than $100 million from some of the largest banks and brokerage firms in the world. If you lost money investing in UBS PR’s Puerto Rico bond funds, you may have certain legal rights that require your immediate attention. Contact us to schedule an appointment or consultation today.

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