UBS Puerto Rico Funds – Class Action versus FINRA arbitration

According to the Investment News, UBS’s proprietary closed-end bond funds in its Puerto Rico family of funds have suffered significant decreases in value.  The Investment News’ report quotes a UBS spokesperson that stated, “General weakness in municipal markets in the U.S. and Puerto Rico, and apprehension about the direction of interest rates have led to steep declines in Puerto Rico municipal bond and closed-end fund prices, and a lack of liquidity for these securities.”

With the announcement of these losses, investors are evaluating their litigation options.  For many investors, the decision is between participating in any class actions that may be filed versus bringing an individual FINRA arbitration against the broker-dealer that recommended the Puerto Rico closed-end fund.

There are pros and cons of each option.

A class action is, of course, a lawsuit filed on behalf of a group, or “class,” of individuals with similar legal claims.

Class actions provide a means through which plaintiffs may bring small legal claims that would be too costly to litigate individually. Additionally, class actions can equalize the difference in power between robust entities and individuals without significant resources. As a group, individuals amplify their ability to litigate, negotiate and settle disputes.

While the size of a class provides strength to its members, it also limits their choices and options. Unnamed plaintiffs (those who chose not to opt-out), have the least amount of control over the case. For instance, the named plaintiffs can accept a settlement, which is binding on all class members, regardless of whether un-named members want the case to be determined by a verdict after a full trial. Finally, the complexity of class action cases makes them difficult and expensive to litigate, requiring greater time and resources of the attorneys and the court.

An individual arbitration, on the other hand, requires more personal involvement but if the losses are great enough (i.e. in excess of $75,000) the additional time needed usually is worth the additional time spent because of the potential for a far greater recovery.  Fortunately, the amount of time needed for a FINRA arbitration is not even that great.  For those individuals that chose to hire an attorney, the time spent by the investor is usually limited to collecting documents needed for the discovery process and attending the hearing if there is one.

Again, this time is usually well worth it if the case is large enough to warrant it.  If, however, the losses are small a class action is a great way for an investor to receive some compensation for their losses.

The foregoing information has been provided by The White Law Group, LLC.  The White Law Group is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Boca Raton, Florida and Chicago, Illinois.

The White Law Group’s continues to investigate the liability that brokerage firms may have for recommending UBS Puerto Rico closed-end funds.  The firm’s includes, but is not limited to, recommendations to invest in the following closed-end funds:

UBS Puerto Rico Fixed Income Fund I, Inc.

UBS Puerto Rico Fixed Income Fund II, Inc.

UBS Puerto Rico Fixed Income Fund III, Inc.

UBS Puerto Rico Fixed Income Fund IV, Inc.

UBS Puerto Rico Fixed Income Fund V, Inc.

UBS Puerto Rico Fixed Income Fund VI, Inc.

UBS Puerto Rico Investors Tax-Free Fund, Inc.

UBS Puerto Rico Investors Tax-Free Fund II, Inc.

UBS Puerto Rico Investors Tax-Free Fund III, Inc.

UBS Puerto Rico Investors Tax-Free Fund IV, Inc.

UBS Puerto Rico Investors Tax-Free Fund V, Inc.

UBS Puerto Rico Investors Tax-Free Fund VI, Inc.

UBS Puerto Rico AAA Portfolio Bond Fund, Inc.

UBS Puerto Rico AAA Portfolio Bond Fund II, Inc.

UBS Puerto Rico AAA Portfolio Target Maturity Fund, Inc.

UBS Puerto Rico Tax-Free Target Maturity Fund I, Inc.

UBS Puerto Rico Tax-Free Target Maturity Fund II, Inc.

UBS Tax Free Puerto Rico Fund, Inc.

UBS Tax Free Puerto Rico Fund II, Inc.

UBS Tax Free Puerto Rico Target Maturity Fund, Inc.

UBS Puerto Rico Mortgage-Backed & Government Securities Fund, Inc.

UBS Puerto Rico GNMA & US Government, Inc.

For more information on The White Law Group’s UBS Puerto Rico Fund investigation, visit https://whitesecuritieslaw.com/2013/10/14/helpful-information-for-ubs-puerto-rico-fund-investors/.