On October 30, 2013 a Securities and Exchange Commission (SEC) Administrative Law Judge dismissed an administrative proceeding against two UBS Puerto Rico employees, Miguel A. Ferrer and Carlos J. Ortiz. Cases such as this are prosecuted by the SEC’s Division of Enforcement and are decided by administrative law judges who work within the SEC. SEC Chief Administrative Law Judge Brenda P. Murray ruled that there was insufficient evidence to prove that these specific UBS employees had committed fraud in 2008 and 2009 in connection with the sale of UBS mutual funds focused on Puerto Rico municipal bonds. The SEC had accused Ferrer and Ortiz of making false statements in connection with the sale of UBS Puerto Rico municipal bond funds to UBS customers.
ALJ Murray stated in her order: “I do not find the preponderance of the evidence supports the division’s allegation that UBS PR, Ferrer and Ortiz engaged in a fraudulent course of conduct or a scheme to mislead customers when they represented the funds as profitable, safe, and stable investments and that supply and demand were responsible for fund prices.”
UBS is facing a flood of investor complaints and arbitration actions stemming from its sale of Puerto Rico municipal bond funds. Investors contemplating taking legal action against UBS in connection with UBS’s recommendation and sale of Puerto Rico municipal bond funds should keep in mind that the recent ruling in favor of these UBS employees will have little effect upon most investors’ potential cases.
It never made sense for conservative investors seeking income to invest in these funds, for investors to concentrate their savings in these funds, or to purchase these funds on margin. There is strong evidence that UBS made unsuitable recommendations to many of its brokerage customers and that UBS continued to push these investments upon its customers even after UBS had to step in behind the scenes in to prop up the failing Puerto Rico municipal bond market.
Investors in UBS Puerto Rico municipal bond funds may recoup losses by pursing claims for misrepresentation and unsuitability in arbitration at FINRA Dispute Resolution.
UBS investors are encouraged to contact the law firm of Blau & Malmfeldt to discuss recovery options. Blau & Malmfeldt is a law firm that represents investors across the United States in securities, commodity futures, partnership, and shareholder rights disputes. Contact us at 312-443-1600 for a free initial consultation.