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Investors Begin Filing Claims Against UBS Puerto Rico Brokers

Legal problems tied to UBS Financial Services of Puerto Rico and, specifically, to sales of a group of troubled closed-end municipal bond funds, are big and getting bigger. Now, investors who suffered financial losses from the investments are taking action against the UBS brokers who sold them the products.

The market for Puerto Rico’s $70 billion muni debt went south when the city of Detroit filed for Chapter 9 bankruptcy protection on July 18.  The bankruptcy filing made Detroit the largest city in U.S. history to do so. The UBS unit in Puerto Rico is a major player in the muni-debt market in Puerto Rico, packaging and selling $10 billion in proprietary closed-end bond funds as of the end of last year.

As reported earlier today by Investment News, disgruntled investors are filing arbitration claims with the Financial Industry Regulatory Authority (FINRA) against individual brokers at UBS Puerto Rico. One of those brokers, Jose Gabriel Ramirez Jr., has had seven investor complaints totaling nearly $51 million filed against him, according to his BrokerCheck report.

The seven complaints range from $1 million to $26 million in alleged damages. In each complaint, investors allege actions of overconcentration and misrepresentation of the closed-end funds by the UBS brokers.

According to the Investment News story, Ramirez currently is on administrative leave from UBS Puerto Rico.

The value of the closed-end bond funds at the focus of investors’ claims with FINRA plummeted by 50% to 60% during the second half of this year.

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