The client is 70 years old, retired and residing in San Juan, Puerto Rico. UBS Puerto Rico developed, marketed and managed the investments in the case.
A UBS Puerto Rico financial advisor allegedly made unsuitable recommendations that the client hold an excessive concentration of Puerto Rico securities, namely the Puerto Rico bonds and bond funds, leaving the client’s investment portfolio undiversified by both asset allocation and geographic area, i.e., Puerto Rico. UBS Puerto Rico and its representatives continuously gave misleading information to the client about both the nature and risk of the investments in his account, alleging that holding Puerto Rico bonds was “safe” because they were “constitutionally protected.” Consequently, the client suffered substantial losses.
The UBS Puerto Rico broker and the client met in 2009 to review the client’s portfolio, discussing the substantial losses he suffered as a result of his prior broker’s unsuitable recommendations. The client told the UBS Puerto Rico broker he only wanted to invest in low risk securities. With the assurances of the broker, the client agreed to open a UBS Puerto Rico account.
The client and the UBS Puerto Rico broker met again and reviewed every security in the account transferred to UBS Puerto Rico, discussing at length the UBS Puerto Rico bond funds and allegedly claiming the bond funds had an excellent track record, were highly recommended, ideal retirement investments and mustn’t be sold. The UBS Puerto Rico broker even recommended that he take out a loan to purchase more of them.
The UBS Puerto Rico broker made unsuitable recommendations, knowing that the client’s portfolio was geographically concentrated in Puerto Rico and that he was vulnerable to its many political and economic problems. Consequently, the client was exposed to a great risk of loss from the start.
Taking his broker’s advice, the client didn’t sell any of the Puerto Rico bonds and over the next four years was continuously advised to hold all of the Puerto Rico bonds in his account because they were constitutionally protected.
In the Summer of 2013, the client heard on the radio that Puerto Rico bonds might become junk bonds. When he asked the UBS Puerto Rico broker how she was going to protect his account, she told him that there was nothing to be worried about, even if the bonds were downgraded, because “they are guaranteed under the Constitution.” When he asked her directly whether he should sell any of the bonds, she told him to hold his investments and even recommended that he purchase more Puerto Rico securities!
The client owned four (4) Puerto Rico bond funds (UBS Funds): Puerto Rico Fixed Income Fund III, Puerto Rico Investors Tax Free Fund V, Puerto Rico Investors Tax Free Fund VI, and Puerto Rico AAA Portfolio Bond Fund.
The UBS Funds were very illiquid, highly leveraged and risky investments for retirees living on such a small island. The UBS Puerto Rico broker not only told the client to hold all of his Puerto Rico bonds, but to buy more. The UBS Puerto Rico broker’s actions were in violation of FINRA Rules of Conduct 2110, 2111 (f/k/a 2310) and 2120, which relate to standards of commercial honor and principles of trade, suitability, and the use of manipulative, deceptive or fraudulent devices, respectively.
The client is seeking rescission and compensatory damages due to the losses which were the result of his UBS Puerto Rico broker’s misconduct. The client is also seeking lost opportunity damages, interest on his claim from the time it accrued, punitive damages and all other costs and expenses, including legal fees.
For dedicated representation by a law firm with substantial experience in all kinds of securities, commodities and investment law matters, contact us by phone at 561-338-0037 or toll free at 800-732-2889 or via e-mail. We may also be able to arrange a meeting with you at offices in San Juan, Puerto Rico, or Boca Raton, Fort Lauderdale, Miami and West Palm Beach, Florida and elsewhere.
Robert Wayne Pearce
Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $125 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.
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