UBS Category Archives — Page 2 of 3 — Investor Lawyers Blog Published by New York, New York Investor Attorneys

Published on: November 1, 2013

SEC Judge Decision In Ferrer Case Does Not Prevent Investors From Pursuing Claims Concerning UBS PR Closed-End Funds

Securities and Exchange Commission (“SEC”) Administrative Law Judge Brenda P. Murray recently issued an Initial Decision in In re Ferrer and Ortiz, Initial Decision Release No. 513, Administrative Proceeding File No. 3-14862. In the decision Judge Murray declined to order remedial action against former UBS Puerto Rico employees Miguel A. Ferrer and Carlos Juan Ortiz-Leon and also found that certain conduct by Messrs. Ferrer and Ortiz did not violate the federal securities laws. The charges of wrongdoing, which Judge Murray rejected, involved allegedly misleading statements that Ferrer and Ortiz made about the value of UBS PR closed-end funds, as well as certain UBS PR practices with respect to the pricing of UBS PR closed-end funds.

While no action was taken against Messrs. Ferrer and Ortiz, the SEC judge’s decision does not necessarily mean that investors in UBS Puerto Rico closed end funds do not have valid claims. The conduct charged in the SEC proceeding occurred during 2008 and 2009, and the decision was largely limited to addressing charges that Mr. Ferrer and Mr. Ortiz violated federal securities laws by making misleading statements concerning the value of UBS PR closed-end funds during the 2008-09 time frame. The full text of the SEC judge’s decision is accessible on this page.
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Investors may have valid claims that are different from those rejected in the SEC judge’s decision. Some investors reportedly received unsuitable recommendations to purchase the UBS PR closed-end funds based on representations by individual brokers. Some investors reportedly chose to buy the funds based on the representation that the funds paid a steady yield of dividends, but were safe, and that investors’ principal was not at risk because of the secure municipal bonds backed by the Puerto Rico government in which the funds invested. Such investors would be asserting claims under a completely different legal standard set forth in Financial Industry Regulatory Authority (“FINRA”) rules, and also may be complaining of conduct that occurred after 2009- even as late as August and September, 2013. Therefore, the decision in the SEC case against Ferrer and Ortiz does not mean that individual investors cannot pursue claims against brokers who sold them UBS Puerto Rico closed-end fund shares.

Published on: October 17, 2013

$7 Million Awarded to Investor in FINRA Auction-rate Securities Dispute

by InvestorLawyers

Investors who suffered significant losses as a result of their auction-rate securities investment with Jeffries Group LLC may be able to obtain a recovery via FINRA securities arbitration. Jeffries Group is a subsidiary of Leucadia National Corp., another full-service brokerage firm. Recently, Jeffries was ordered to pay an investor $7 million regarding an auction-rate securities dispute.

In May 2012, a statement of claim was filed with the Financial Industry Regulatory Authority by Saddlebag LLC. The claim alleges that the firm wrongfully invested the client’s assets in illiquid auction-rate securities (ARS). According to securities lawyers, many financial firms sold auction-rate securities as short-term instruments with a highly-liquid nature, much like money market funds.

However, in 2008, the credit crunch resulted in a failure of the ARS market and investors with a piece of the $330 billion market were stuck holding securities that they were unable to sell. Other firms, including Morgan Keegan, have been accused of misleading investors regarding the liquidity risk of auction-rate securities.

Published on: October 9, 2013

Gray Firm Investigating Additional Claims Concerning UBS Puerto Rico Funds

by InvestorLawyers

Law Office of Christopher J. Gray, P.C. has filed a Financial Industry Regulatory Authority (“FINRA”) arbitration claim involving a retiree’s investment in a closed-end fund known as Puerto Rico Fixed Income Fund I (CUSIP No. 744907106, hereinafter “Fund I”). The fund was structured by UBS Puerto Rico, a unit of the Swiss banking giant UBS AG (NYSE:UBS). The case is pending in Miami, Florida.

Investors have reported that financial advisors in Puerto Rico sold them closed-end funds based on the representation that the funds paid a steady yield of dividends, but were safe and that investors’ principal was not at risk because of the secure municipal bonds backed by the Puerto Rico government in which the funds invested.

However, Puerto Rico municipal bonds have been anything but secure of late. Since 2000, the Commonwealth has experienced an imbalance between recurring government revenues and total expenditures. In 2009, the deficit reached a record $3.306 billion. Further, as of June 2010, the unfunded public employees’ retirement accounts reportedly had an actuarial shortfall totaling approximately $25 billion. As a result of these poor fundamentals, investors are concerned about the creditworthiness of the Puerto Rico government and as a result the prices of some Puerto Rico government bonds have dropped. Reportedly, certain ten-year Puerto Rico general obligation bonds had a yield of 4.89% as of September 30, 2013 (bond yields rise as bond prices fall).

Published on: October 3, 2013

Gray Firm Files FINRA Claim Concerning UBS Puerto Rico Fund Known As Puerto Rico Fixed Income Fund I

by InvestorLawyers

Law Office of Christopher J. Gray, P.C., a New York City law firm handling arbitration claims on behalf of investors throughout the United States, has filed a Financial Industry Regulatory Authority (“FINRA”) arbitration claim involving a retiree’s investment in a closed-end fund known as Puerto Rico Fixed Income Fund I (CUSIP No. 744907106, hereinafter “Fund I”). The fund was structured by UBS Puerto Rico, a unit of the Swiss banking giant UBS AG (NYSE:UBS). The case is pending in Miami, Florida.

The arbitration claim alleges that Fund I was sold by Merrill Lynch as one of a group of safe mutual funds that were largely invested in municipal bonds issued by the Puerto Rico government. The closed-end funds such as Fund I are solely for sale to residents of Puerto Rico and have reportedly been heavily marketed there by UBS and other brokerage firms (including Merrill Lynch) for at least the past 5 years. Several of the 23 closed-end funds in question have reportedly lost over half their value, despite being marketed as safe investments.

The New York Times Dealbook blog reports that some UBS customers were encouraged by its brokers to borrow money to invest in these funds and that in some cases, money was lent improperly, exacerbating current losses. A number of UBS clients have reportedly been forced to liquidate hundreds of millions of dollars in holdings in these funds to meet margin calls. Robert Mulholland, the head of wealth management advisers in the Americas for UBS, reportedly characterized the closed-end fund issue as ”the perfect storm” in a meeting in San Juan last month.

Published on: October 3, 2013

UBS Allegedly Mislead CDO Investors, Ordered to Pay $50 Million by SEC

by InvestorLawyers

Investment fraud lawyers are currently investigating claims regarding UBS Securities. UBS Securities has agreed to pay almost $50 million to settle charges that it violated securities laws regarding certain collateralized debt obligation, or “CDO”, investments. The charges apply to the firm’s structuring and marketing of ACA ABS 2007-2 — a CDO, or collateralized debt obligation. Allegedly, UBS failed to disclose the fact that it retained millions in upfront cash while acquiring collateral. The SEC officially charged UBS on August 6, 2013.

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The collateral for the CDO was managed by ACA Management and reportedly was primarily consisted of CDS on subprime RMBS, or residential mortgage-backed securities. According to securities arbitration lawyers, the CDO — as the “insurer” — received premiums from the CDS collateral on a monthly basis. Then the premiums were used for CDO bondholder payments. According to the SEC, ACA and UBS agreed that the collateral manager would seek bids for yield that contained both a fixed running spread and upfront cash in the form of “points.”

According to the SEC’s findings, UBS collected upfront payments totaling $23.6 million while acquiring collateral and, instead of transferring the upfront fees at the same time as the collateral, UBS kept the upfront payments and chose not to disclose this information. In addition to retaining the undisclosed $23.6 million, it also retained a disclosed fee of $10.8 million. Investment fraud lawyers say the decision not to disclose the retention of the upfront points was inconsistent with prior UBS deals and the industry standard. Allegedly, UBS’ head of the U.S. CDO group stated, “Let’s see how much money we can draw out of the deal.”

Published on: August 12, 2013

15 Brokerage Firms Subpoenaed Over Alternative Investment Sales

by InvestorLawyers

Reportedly, 15 brokerage firms have been subpoenaed by the Commonwealth of Massachusetts as part of an investigation into sales of alternative investments to senior citizens.

15 Brokerage Firms Subpoenaed Over Alternative Investment Sales

The following firms have reportedly been subpoenaed: Merrill Lynch, Morgan Stanley, UBS Securities LLC, Charles Schwab & Co. Inc., Fidelity Brokerage Services LLC, Wells Fargo Advisors, ING Financial Partners Inc., TD Ameritrade Inc., LPL Financial LLC, MML Investor Services LLC, Commonwealth Financial Network, Investors Capital Corp., WFG Investments Inc. and Signator Investors Inc.

According to securities arbitration lawyers, the state sent subpoenas to the firms on July 10, 2013, requesting information regarding the sale of certain products to Massachusetts residents 65 or older over the last year. Nontraditional investments include private placements, hedge funds, oil and gas partnerships, tenant-in-common offerings, and structured products.

Published on: August 1, 2013

100 Percent Principal Protected Note Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of customers of UBS Financial Services who were sold 100 Percent Principal Protected Notes. 100 Percent Principal Protected Notes were bonds or structured notes issued by Lehman Brothers Inc. Lehman Brothers declared bankruptcy in September of 2008, resulting in disastrous losses for many investors.

100 Percent Principal Protected Note Investors Could Recover Losses

Recently, a Financial Industry Regulatory Authority arbitration claim was filed on behalf of a Texas investor against UBS Financial Services. According to the Statement of Claim, UBS Financial Services allegedly sold the investor, who was a brokerage customer of the firm at the time, $300,000 of the 100 Percent Principal Protected Notes.

According to the claim’s allegations, UBS was aware of the deteriorating financial condition of Lehman Brothers, but concealed its views from brokerage customers who owned the notes. Furthermore, UBS customers were allegedly kept unaware that the Lehman Brothers notes could quite possibly default and become worthless. In addition, the claim alleges that the sales of Lehman notes were halted twice by UBS Financial Services because of concerns regarding credit risk, but UBS did not disclose these halts to thousands of its customers who were already invested in Lehman notes.

Published on: July 18, 2013

UBS Allegedly Made Unsuitable Recommendation of Lehman Structured Products

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of the unsuitable recommendation of Lehman structured products. Recently, a securities arbitration claim was filed on behalf of a couple who did business with UBS Financial Services Inc. The FINRA arbitration was filed against UBS Financial Services and alleges the improper and unsuitable sale of Lehman structured products.

UBS Allegedly Made Unsuitable Recommendation of Lehman Structured Products

According to the Statement of Claim, the couple was nearing retirement and, therefore, wanted to preserve and protect their savings. Allegedly, they were presented with a written financial plan by UBS Financial Services that recommended an allocation of 52 percent equities and 46 percent fixed income for their “moderate” objectives and risk tolerance.

However, securities arbitration lawyers say the claim alleges that UBS disregarded the recommended allocation and concentrated the couple’s accounts in structured products and notes and equities for the “fixed income” portion. These investments allegedly included Lehman structured products, which UBS was aware carried significant default risk.

Published on: February 26, 2013

Paulson Hedge Fund, Full-service Brokerage Firm Feeder Fund Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors with full-service brokerage firms who suffered significant losses as a result of their investment in Paulson & Co.’s Advantage and Advantage Plus hedge funds. Reportedly, the Advantage Fund’s value declined 51 percent in 2011 and 19 percent in 2012. According to Securities and Exchange Commission filings, many major brokerage firms including Citigroup, Morgan Stanley, Merrill Lynch and UBS Financial Services used proprietary “feeder” funds to invest in the Paulson funds.

Paulson Hedge Fund and Full-Service Brokerage Firm Feeder Fund Investors Could Recover Losses

The feeder funds used by full-service brokerage firms to invest in Paulson’s Advantage and Advantage Plus Funds went by a variety of names, such as LionHedge Paulson, UBS Paulson Advantage Fund, Morgan Stanley HedgePremier Paulson, Paulson Advantage Access Fund and CAIS Paulson. Stock fraud lawyers say that all of the aforementioned funds invest in Paulson’s funds and that in some cases they may not have provided oversight or due diligence in the funds, despite representations made to investors.

Following the Advantage Fund’s decline, in May 2012 the fund was put on Morgan Stanley Wealth Management’s “watch list” and investors are now being advised to redeem. Three months later, Citigroup reportedly made a similar decision, pulling $410 million from Paulson’s funds. In light of the fact that the Paulson funds were sued by an investor in February 2012, many investors are contacting securities fraud attorneys about their losses. In the 2012 lawsuit, both Paulson & Co. and its funds were charged with deeply investing into SinoForest without conducting adequate due diligence and accused of breach of fiduciary duty.

Published on: January 31, 2013

Bambi Holzer Still Trading Despite Numerous Customer Complaints

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Bambi Holzer. According to a Forbes article, Holzer’s investment advice has resulted in securities settlements amounting to more than $12 million. Despite this article, which appeared three years ago, her trades are still being cleared by brokerage firms.

Bambi Holzer Still Trading Despite Numerous Customer Complaints

Currently a broker at Newport Coast Securities, Holzer has also worked with a number of other firms, including UBS, Brookstreet Securities Corporation, AG Edwards, Wedbush Morgan Securities Inc. and Sequoia Equities Securities. Holzer and UBS have already been compelled to pay to settle securities claims amounting to $11.4 million. These claims alleged that Holzer misrepresented variable annuities through misrepresentation of guaranteed returns. Holzer was fired from AG Edwards in 2003 for allegedly engaging in business practices that did not coincide with the firm’s policies. Further allegations against Holzer include misrepresentations while at Brookstreet. These misrepresentations allegedly occurred in 2005 at a Beverly Hills presentation at which Holzer allegedly stated that a fictional couple was able to make $9 million by deferring $732,000 in taxes through the use of trusts. In another claim, a customer of Wedbush Morgan Securities alleged breach of fiduciary duty, account mishandling, and breach of contract that allegedly resulted in damages of $824,000.

According to securities fraud attorneys, allegations against Holzer include fraud, churning, unsuitable investments, misrepresentations of fees, Securities Act violations, private placement-related fraud, negligent representations related to variable annuities, inadequate supervision, variable annuity-related fraud, negligent recommendation and sale of Provident Royalties LLC, negligent sale and recommendation of Behringer Harvard Security trust and other unsafe products as well as elder abuse.