UBS Financial Services, Inc. and UBS Financial Services of Puerto Rico (collectively “UBS”) must pay over $2.5 million to Orlando Rodriguez Gonzales and Milagros Vila Maldonado for their investment losses related to the proprietary closed-end bond funds that they bought in Puerto Rico. The funds were sold to them by former UBS broker Jose Gabriel Ramirez, Jr., who is often referred to as “The Whopper.”
The San Juan, Puerto Rico couple, who are in their seventies, claim that they gave their liquid savings to UBS to invest. According to their complaint, the Whopper recommended they take out a $3 million loan and reinvest $2 million of that in the closed-end funds.
The result was that Gonzalez and Maldonado lost roughly $2.1 million in assets after the funds abruptly and swiftly dropped in value in 2013. Gonzalez and Maldonado filed a Financial Industry Regulatory Authority arbitration claim alleging breach of fiduciary duty, unsuitable investment, fraud, and negligence related to the Puerto Rico closed-end mutual funds.
Gonzales and Maldonado are not Ramirez’s only clients to pursue claims for losses they sustained by investing in Puerto Rico municipal bonds or UBS’s closed-end bond funds. Ramirez’s BrokerCheck report shows that tens of millions of dollars in investor complaints have been brought against UBS because of his management.
As far back as 2013, Ramirez’s profile on that website noted that there were already at least seven complaints totaling $50.9 million. Recently, a FINRA arbitration panel awarded Francisco Ramis and his sister Ines Maria Ramis, also former Ramirez clients, about $250,000. The siblings’ lawyer said that UBS gave them a $1 million non-purpose loan that was invested in the closed-end funds. Their portfolio then became over-concentrated with the funds. Ramirez was a close family friend.
Ramirez is not the only former UBS broker under fire. Hundreds of investors have come forward claiming that the firm’s representatives not only encouraged them to invest in Puerto Rico closed-end funds but also suggested that they take out loans to purchase even more of these funds. About 900 Puerto Rico muni bond fraud cases have been brought against the firm so far. Earlier this year, UBS was ordered by FINRA arbitrators to pay close to $1.5 million to investors in three other Puerto Rico bond fraud cases.
Puerto Rico Municipal Bond Fraud Cases
The investors that we have spoken to at Shepherd Smith Edwards and Kantas, LTD LLP say that they lost a substantial amount of money by investing in the closed-end funds. Some of them are retirees who saw their savings decimated as a result of the bad investment advice they received from UBS brokers or representatives from other financial firms, such as Banco Santander (SAN) and Banco Popular.
Many investors universally claim they were told the investments were low risk and safe (which is reflected in the prospectus). Moreover, complaints filed thus far contend that UBS earned billions of dollars in fees by trading and selling the funds. According to The Wall Street Journal, these investors also are saying that they were unaware that UBS controlled the funds’ market. They believe that this control made the funds illiquid.
In the US and the Commonwealth, please contact our Puerto Rico municipal bond fraud lawyers to request your free case consultation.
Puerto Rico Investors Win Relief From UBS, The Wall Street Journal, August 11, 2015