UBS reports its anticipated exposure in the Puerto Rico bond fiasco

According to a recent Investment News report, UBS has put a cost on its brokerage’s bet on Puerto Rico at $41 million.

Apparently, in its third-quarter earnings report released Tuesday, UBS said it took a $20 million trading loss and $21 million in credit losses connected to loans that were backed by Puerto Rican municipal securities and “related funds.”

The trading loss likely reflects the efforts provisions UBS made to provide liquidity to its clients in the UBS Puerto Rico funds offered by the firm.  UBS was the market maker for these proprietary bonds and when a client wanted to sell a bond, if there was not a buyer, UBS would often purchase the bonds and add them to their inventory.

UBS Financial Services Inc. of Puerto Rico (a UBS subsidiary) is also the subject of arbitration claims filed by investors, including a claim filed by this law firm.  These claims generally allege that UBS improperly sold these highly leveraged closed-end funds without regard to the clients’ suitability profiles.

The UBS Puerto Rico family of funds consists of 14 closed-end funds sold exclusively through financial advisors and brokers with UBS Financial Services Inc. of Puerto Rico. According to marketing materials, UBS had sold more than $10 billion of the closed-end funds through the end of 2012.

The White Law Group continues to investigate potential claims against UBS Financial Services, Inc. of Puerto Rico.  Given the amount of the UBS Family of Puerto Rico Funds sold by the firm, it appears that UBS’s exposure may even be larger than UBS has disclosed in its latest quarterly earnings report.

For more information on The White Law Group’s investigation, visit https://whitesecuritieslaw.com/2013/10/21/recover-ubs-puerto-rico-fund-investment-losses/.

If you suffered losses in a UBS Puerto Rico closed-end fund and would like to speak to a securities attorney regarding your litigation options, please call The White Law Group at 561-807-6804 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.  The firm represents investors in claims against brokerage-firms throughout the country and internationally.