SEC Judge Decision In Ferrer Case Does Not Prevent Investors From Pursuing Claims Concerning UBS PR Closed-End Funds

by Christopher J. Gray on November 1, 2013

in FINRA,FINRA Arbitration,Puerto Rico municipal bond funds,UBS


Securities and Exchange Commission (“SEC”) Administrative Law Judge Brenda P. Murray recently issued an Initial Decision in In re Ferrer and Ortiz, Initial Decision Release No. 513, Administrative Proceeding File No. 3-14862.  In the decision Judge Murray declined to order remedial action against former UBS Puerto Rico employees Miguel A. Ferrer and Carlos Juan Ortiz-Leon and also found that certain conduct by Messrs. Ferrer and Ortiz did not violate the federal securities laws. The charges of wrongdoing, which Judge Murray rejected, involved allegedly misleading statements that Ferrer and Ortiz made about the value of UBS PR closed-end funds, as well as certain UBS PR practices with respect to the pricing of UBS PR closed-end funds. 

While no action was taken against Messrs. Ferrer and Ortiz, the SEC judge’s decision does not necessarily mean that investors in UBS Puerto Rico closed end funds do not have valid claims.  The conduct charged in the SEC proceeding occurred during 2008 and 2009, and the decision was largely limited to addressing charges that Mr. Ferrer and Mr. Ortiz violated federal securities laws by making misleading statements concerning the value of UBS PR closed-end funds during the 2008-09 time frame. The full text of the SEC judge’s decision is accessible on this page.
UBS ADMIN DECISION

Investors may have valid claims that are different from those rejected in the SEC judge’s decision.  Some investors reportedly received unsuitable recommendations to purchase the UBS PR closed-end funds based on representations by individual brokers.  Some investors reportedly chose to buy the funds based on the representation that the funds paid a steady yield of dividends, but were safe, and that investors’ principal was not at risk because of the secure municipal bonds backed by the Puerto Rico government in which the funds invested.  Such investors would be asserting claims under a completely different legal standard set forth in Financial Industry Regulatory Authority (“FINRA”) rules, and also may be complaining of conduct that occurred after 2009- even as late as August and September, 2013.  Therefore, the decision in the SEC case against Ferrer and Ortiz  does not mean  that individual investors cannot pursue claims against brokers who sold them UBS Puerto Rico closed-end fund shares.  

Clients who invested in the following funds may wish to consider attempting to recover their losses through the FINRA arbitration process: Tax-Free Puerto Rico Fund, Tax-Free Puerto Rico Fund II, Tax-Free Puerto Rico Target Maturity Fund, Puerto Rico AAA Portfolio Target Maturity Fund, Inc., Puerto Rico AAA Portfolio Bond Fund, Puerto Rico AAA Portfolio Bond Fund II, Puerto Rico GNMA & U.S. Government Target Maturity Fund, Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Puerto Rico Fixed Income Fund, Puerto Rico Fixed Income Fund II, Puerto Rico Fixed Income Fund III, Puerto Rico Fixed Income Fund IV, Puerto Rico Fixed Income Fund V, Puerto Rico Fixed Income Fund VI, Puerto Rico Short Term Investment Fund, Multi-Select Securities Puerto Rico Fund, UBS IRA Select Growth & Income Puerto Rico Fund, Puerto Rico Investors Family of Funds, Puerto Rico Investors Tax-Free Fund, Puerto Rico Investors Tax-Free Fund II, Puerto Rico Investors Tax-Free Fund III, Puerto Rico Investors Tax-Free Fund IV, Puerto Rico Investors Tax-Free Fund V, Puerto Rico Investors Tax-Free Fund VI, Puerto Rico Tax-Free Target Maturity Fund, Puerto Rico Tax-Free Target Maturity Fund II, Inc., Puerto Rico Investors Bond Fund I.

Attorneys are available to review possible cases involving UBS Puerto Rico closed-end funds.  Investors who were not told the truth about these funds may have a claim against UBS and/or the broker or other brokerage firm that sold them the funds.  In addition, investors who could not afford to take the risk of losing money in these funds, but received reommendations to buy the funds, may also have claims.  Investors may contact the Gray Firm in New York at (866) 966-9598 or newcases@investorlawyers.net (or via the contact form on this page) for a confidential, no-obligation consultation. 

Puerto Rico requires that attorneys be licensed in order to appear as counsel of record in FINRA arbitration proceedings.  The Gray Firm is not licensed to practice in Puerto Rico and is offering legal advice only to investors in the states.  The Gray Firm is working with Puerto Rico attorneys who can advise and represent those investors who live in Puerto Rico.  

 

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