Tag Archives: Puerto Rico

UBS Investor Loss Recovery

UBSIf you are an investor with UBS suffering losses in investments made between 2011 and 2014 you may be entitled to a recovery.  Please call 1-866-817-0201 for a free consultation.

As reported by Rueters, UBS Group AG has agreed to pay more than $15 million to settle U.S. Securities and Exchange Commission (SEC) charges that its failure to properly train brokers led to customers buying hundreds of millions of dollars of unsuitable securities.

The SEC said on Wednesday that UBS from 2011 to 2014 sold about $548 million of “reverse convertible notes,” derivatives tied to individual stocks, to more than 8,700 retail customers who were relatively inexperienced and unsophisticated.

These notes, with mouthfuls of names as Trigger Phoenix Autocall Optimization Securities and Airbag Yield Optimization Securities, were sold to people of modest means, often with low risk tolerances, and included some retirees, the SEC said.

“UBS dropped the ball,” SEC enforcement chief Andrew Ceresney said in a statement.

Gregg Rosenberg, a UBS spokesman, in a statement said the Swiss bank was pleased to settle. It did not admit wrongdoing.

UBS’s payout includes a $6 million civil fine, $8.23 million of improper gains and about $798,000 of interest.

The case is part of a years-long crackdown by the SEC, the Financial Industry Regulatory Authority (FINRA) and other regulators to stop banks and brokerages from selling products that retail and even professional customers may not want, need or understand.

According to the SEC, UBS’s notes were designed to offer attractive yields with a lessened risk of loss.

But Ceresney said on a conference call that UBS’s training focused on describing the “potential upside” from the various products, not their volatility.

Municipal Bond Fund Loss

If you are invested in a U.S. municipal bond mutual fund, odds are they’re exposed to Puerto Rico’s deteriorating financial situation. But because the slow-motion train wreck has been chugging along for several years, with the U.S. commonwealth’s government publicly stating its intention to not pay its bond debt, the weekend’s news that Puerto Rico defaulted on its debt wasn’t a surprise.

This means the heightened risk of loss for municipal bond funds has been known for some time.  Like most investments, those with higher risks pay higher commissions to the brokers that sell them.  Recommending such municipal bond funds while failing to disclose this risk or to recommend such funds to someone who is trying to avoid risk is a form of fraud.

Some municipal bond investments have led to broker misappropriation.  That has been alleged in a customer arbitration suit concerning Merrill Lynch broker Christopher C. Hellman.   FINRA, the Financial Industry Regulatory Authority, investigated the matter and Mr. Hellman failed to respond to the charge.

 

You may be entitled to recovery of your losses if you have been recommended such funds.  Please call 1-866-817-0201.