Many of our clients tell very similar tales about how they were recommended to invest as much as 100% of their portfolios in the UBS Puerto Rico closed-end funds, some through additional margin or bank loans. Now, thanks to an article published by Reuters, Puerto Rico bond fund investors are starting to learn why.
According to the article, a group of brokers came up with a list of 22 reasons why they wanted to stop selling the funds including the facts that the funds suffered from low liquidity, excessive leverage, oversupply and instability, and contained debt underwritten by UBS, a conflict of interests.
However, the audio recordings show that these brokers’ concerns were unacceptable to Miguel Ferrer, the chairman of UBS Financial Services Inc of Puerto Rico, who stated that the brokers should change their mindset or leave the firm. On the tape Ferrer can be heard stating that “You need to focus again on the attractive benefits of our funds and stop this nonsense that there are no products available – because if there are no products, go home, get a new job!”
The UBS Bond Fund tapes are merely the latest evidence that Wall Street believes its job is simply to shove high commission and fee products into client accounts without regard to the possible risks to the client. Since the financial crisis, the brokerage industry has been plagued by exploding proprietary funds and products that firms peddle to their clients. Behind each of these products is a decision by high up executives at these firms that the profits generated mandate that brokers recommend them to their clients.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing clients who invested in the UBS Bond Funds or other Puerto Rico debt. Our consultations are free of charge and the firm is only compensated if you recover.