UBS Financial Services Inc. And Ubs Financial Services Of Puerto Rico Ordered To Pay Millions To Some Investors After Claims Involving UBS’s Proprietary Puerto Rican Bond Funds

San Juan, Puerto Rico – May 3, 2017

UBS Financial Services Inc. and UBS Financial Services of Puerto Rico (collectively “UBS”) have been ordered to pay several investors in Puerto Rico millions of dollars in compensation by several FINRA arbitration panels for losses the investors suffered in Puerto Rico bonds and UBS’s Closed-End Puerto Rico bond funds (the “Funds”).

Many investors have claimed UBS improperly invested their money into UBS Bond Funds. These funds, which were not traded on any exchange, were typically leveraged 2 to 1, resulting in them being concentrated geographically and highly leveraged, greatly increasing the risk. To make matters worse, some investors claim that they were advised to borrow additional money from UBS and use that money to buy yet more bond funds and other Puerto Rico bonds (using leverage to buy leveraged funds). This type of investing, which was forbidden yet, apparently so rampant that UBS has given it a name – “loan recycling” – greatly increases an investor’s risk and profits to the firm. Ultimately, these investors, along with many other Puerto Rico investors, lost millions of dollars of their savings when the market for Puerto Rico bonds collapsed in 2013.

Many of these investors have filed claims against UBS seeking recovery for those losses. Lawyers with the law firm Shepherd, Smith, Edwards, & Kantas LLP recently obtained an award on behalf of one Puerto Rican client ordering UBS to pay approximately $9 million for losses the investors incurred. Other arbitration panels have ordered UBS to pay awards of roughly $9 million and $15 million.

If you are or were a client of UBS, or suffered losses in any other municipal bond investments made at the recommendation of your broker, contact the law firm of Shepherd, Smith, Edwards & Kantas LLP for a free, confidential evaluation of your account. We have a team of attorneys, consultants and staff with more than 100 years of combined experience in the securities industry and in securities law. More information can also be found on our blog at

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