FINRA Orders UBS to Pay Investors Over $2.9M For Puerto Rico Bond and Fund Losses

UBS (UBS) must pay over $2.9M to investors Andres Ricardo Gomez and Ana Teresa Lopez-Gonzales for losses related to their investments in Puerto Rico securities. Mr. Ricardo, Ms. Lopez-Gonzales and their relatives filed an arbitration case with the Financial Industry Regulatory Authority (“FINRA”) claiming breach of fiduciary duty, fraud, breach of contract, negligence, unsuitability, misrepresentation and omission, overconcentration, and failure to supervise under FINRA rules and Puerto Rican law.

Mr. Ricardo’s and Ms. Lopez-Gonzales’ relatives resolved the securities fraud case for an undisclosed sum before the FINRA arbitration panel issued its ruling. The allegations are related to investments in Puerto Rico municipal bonds, UBS proprietary closed-end funds, and the use of Claimants’ investments as collateral to borrow money through credit lines. UBS Financial Services and UBS Financial Services Inc. of Puerto Rico denied all claims.

The Claimants had initially sought $10 million in compensatory damages and other appropriate relief, the cancellation of all loan balances, disgorgement of fees and commissions earned by UBS, pre- and post-award interest, legal fees, expenses, and other fees. Claimants also sought punitive damages.

In response, UBS sought to have the Puerto Rico bond fund case dismissed. In addition, UBS requested that the FINRA panel order Mr. Ricardo and one of the other claimants pay $500,000 in damages.

The FINRA arbitration panel awarded the investors $2.4 million in damages along with interest and over $534,000 in legal expenses and other costs. Of the damages, $545,000 will go to Ms. Lopez-Gonzales and $1.85 million will be paid to Mr. Ricardo and Wave Management. The FINRA arbitration panel also denied UBS’s request for damages against Claimants.

The number of Puerto Rico closed-end fund cases that UBS has lost is going up. In August, the firm was ordered to pay a San Juan couple approximately $2.5 million. Several months ago, UBS was ordered to pay investors in three other cases almost $1.5 million. To date UBS has lost all but one case seeking damages related to the 2013 collapse of UBS’s proprietary Puerto Rico bond funds, and the one case UBS won was not actually arbitrated, nor did the investor have counsel.

Hundreds of cases remain pending against UBS, Banco Santander (SAN), Banco Popular, and other brokerage firms that sold investors Puerto Rico closed-end funds and low-rated Puerto Rico Bonds. Unfortunately many investors sustained massive losses when financial firms in Puerto Rico and their representatives encouraged island investors to place all or most of their savings in Puerto Rico bonds and closed-end funds. Some investors, including retirees, lost everything.

Our securities fraud law firm represents many investors with such claims. Our Puerto Rico bond fraud lawyers are dedicated to helping investors recoup their losses. We represent clients in the Commonwealth and on the US mainland. Contact Shepherd Smith Edwards and Kantas, LLP today for a free, no obligation consultation if you lost money investing in Puerto Rico.



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