UBS Willow Fund investors may consider filing FINRA arbitration claims against UBS Financial Services, Inc., the Willow Fund’s affiliated brokerage firm that sold the Fund. The Willow Fund lost approximately 80% of its value after the Fund’s portfolio manager made massive risky best on credit default swaps. It appears that Willow Fund investors may be victims of investment fraud because the Fund’s use of credit default swaps deviated substantially from the investment strategy that was disclosed in the Fund’s offering documents. UBS broker may be able to help investors.

Securities arbitration cases of this nature often are referred to as “product” cases or “product failure” cases. These often arise when brokerage firms push proprietary investment products on their brokers for sale to investors. Brokerage firms sometimes fail to educate their brokers about the product and the firms do not keep their brokers informed about changes in the nature of the investment. Moreover, brokers also assume that the representations in the products’ offering documents are accurate. As such, brokers are unable to provide investors with accurate information the investments. In turn, brokers recommend the product to investors in good faith, assuming that the brokerage firm has placed a properly structured product in their hands to sell to investors. But because brokers sometimes are not properly informed about the products, they may innocently provide inaccurate information to investors or sell a faulty product.

Unfortunately, brokers often bear the brunt of investors’ frustration when products fail. Investors can become upset with their brokers and the valuable and trusted relationships between brokers and investors can be damaged. The brokers, in turn, feel blind-sided by the brokerage firm that failed to tell the brokers the truth about the investment product.

We have handled hundreds of product-failure cases, where we have filed FINRA arbitration claims against the selling brokerage firms, but not against the individual brokers. In those cases, not only did brokerage firms sell a faulty product without fully informing investors about the nature of the product, but brokerage firms also kept their brokers in the dark about the true nature of the investment product. As such, we argue that the responsible party is NOT the broker, but rather that brokerage firm that improperly structured the product, failed to conduct adequate due diligence on the product, or failed to educate its sales force.

In product cases, brokers often recognize that their brokerage firms misled them and they often refer their customers to law firms like ours to help the investors recover their investment losses. We have found that investors truly appreciate this help from their brokers and that their trust and confidence in their brokers often is restored. Moreover, when we recover money for our clients, investors often forward those new-found assets to the broker.

Notwithstanding that we do not allege wrongdoing on the part of the individual brokers in product cases, brokerage firms often file Form U-4 disclosures that implicate the brokers. In addition to helping investors recover their investment losses, we also assist brokers in the expungement of such customer complaints from their records.

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