UBS Puerto Rico $34 Million Settlement with SEC & FINRA

The Securities and Exchange Commission settled charges against UBS Financial Services of Puerto Rico for failing to supervise former broker, Jose Ramirez Jr. who allegedly had customers invest in funds using money borrowed from a UBS Puerto Rico affiliated bank.

According to SEC press release, the complaint alleged Ramirez misled customers about the safety of the closed end mutual funds and the risks of investing with borrowed money. UBS Puerto Rico and the bank prohibit the use of such loans to purchase securities, yet Ramires did so anyways.

Allegedly, Ramirez lied to the branch manager when questioned about suspicious transactions involving the closed ended mutual funds. On at least two occasions, the SEC alleged that UBS Puerto Rico was made aware of Ramirez’s suspected misconduct, but failed to conduct a reasonable follow up.

“According to the SEC’s order instituting a settled administrative proceeding against UBS PR, the broker-dealer lacked procedures and systems to prevent and detect Ramirez’s misconduct.”

In a separate complaint, the SEC alleged Ramirez instructed clients to transfer their line of credit with UBS Bank USA to an outside bank account before depositing the borrowed money into their UBS PR brokerage account to purchase the closed-end funds. This allowed Ramirez to evade detection, and allegedly increase his compensation by at least $2.8 million.

UBS PR agreed to pay $15 million to settle charges with the SEC. In addition, UBS PR settled similar charges with the Financial Industry Regulatory Authority (FINRA) and Agreed to pay $7.5 million fine and interest on up to $11 million in restitution to investors in the closed end mutual funds.

Brokerage firms, like UBS, have a responsibility to adequately supervise their employees and implement the necessary procedures and systems to detect misconduct. As such, The White Law Group continues to investigate claims against UBS Puerto Rico on behalf of investors in closed-end funds.

If you are concerned about your investment made with UBS Puerto Rico and would like to speak to a securities attorney, please call The White Law Group at 888-637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Vero Beach, Florida.

For more information on The White Law Group, please visit our website at whitesecuritieslaw.com.