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Zamansky LLC Investigates UBS Puerto Rico Bond Funds and Financial Advisors

October 8, 2013 Active Cases & Investigations

Zamansky LLC investigates UBS Financial Services Inc. of Puerto Rico over its financial advisors and alleged sales of leveraged bond funds. The investigation concerns both sales practices of the advisors and the sale of proprietary bond funds by UBS.

Zamansky LLC investigates UBS Financial Services Inc. of Puerto Rico (“UBS Puerto Rico”) which has five branch offices and approximately 132 financial advisors. The investigation concerns both sales practices of the advisors and the sale of proprietary municipal and leveraged UBS Puerto Rico bond funds, including the Tax Free Puerto Rico Fund II.

On May 1, 2012 the Securities and Exchange Commission (SEC) issued a Cease-and-Desist Order in an Administrative Proceeding, No. 3-14863, against UBS Puerto Rico. In the Order, UBS Puerto Rico agreed to pay $26 million in disgorgement and finds to settle charges that it sold allegedly mispriced closed end funds to investors. The alleged mispricing related to proprietary funds of UBS Puerto Rico which invested in Puerto Rican municipal bonds.

On October 2, 2013 Susanne Craig on the New York Times reported in her article “UBS Brokers in Puerto Rico Create Headache for the Bank,” that UBS has commenced an investigation over the sales of leveraged bond funds to its clients. One such fund is the Tax Free Puerto Rico Fund II which, she reports, has a leverage ratio of 53 percent. She reports that UBS put one broker on administrative leave for recommending that a client borrow on a line of credit to invest.

According to stock fraud attorney, Jacob Zamansky, any leveraged bond whether it holds stocks, bonds or some other investment is a highly volatile and risky investment. Leveraged bond funds are not appropriate for conservative or even moderate investors, and investors need to be advised of the risks, he states. It is also inappropriate for a financial advisor to recommend borrowing on margin or through a line of credit to purchase a leveraged fund, Zamansky states.

What Investors Can Do

If you were a UBS Puerto Rico investor who allegedly suffered a loss from a proprietary bond fund, or you would like to have your accounts reviewed, you may, without obligation or cost to you, email or call the law firm at (212) 742-1414.

About Zamansky LLC

Zamansky LLC is a leading investment fraud law firm specializing in securities arbitration and securities class actions. Our stock fraud attorneys represent both individual and institutional investors. Our stockbroker fraud practice is nationally recognized for our ability to aggressively prosecute cases and recover losses.

Please click here to view the full New York Times article about USB Brokers in Puerto Rico.


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Jake Zamansky, 212-742-1414

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William E.

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