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Puerto Rico Investors Reportedly File Dozens of Cases Against UBS Financial Services of Puerto Rico Regarding Sales of Puerto Rico Closed-End Funds

The Financial Industry Regulatory Authority (known as “FINRA”) has reportedly received dozens of filings for arbitration from investors on the island who say they were harmed by negligence and unsuitable advice from UBS Financial Services of Puerto Rico. The increase in claims coincides with the commonwealth preparing for a new issue of general obligation bonds and the main rating agencies labeled Puerto Rico bond funds as “junk bonds”. 


The market for Puerto Rico debt became increasingly volatile last year amid concerns over the island’s economy, as the government enacted various reforms but was ultimately unable to protect the commonwealth’s investment grade credit ratings. Although there has not yet been a spike in forced selling of municipal bonds issued by the Puerto Rico government by funds with investment-grade mandates, some analysts believe that the downgrade of Puerto Rico debt to “junk” status by ratings agencies will eventually cause some municipal bonds issued by Puerto Rico to lose value. If the value of Puerto Rico bonds drops, certain closed-end funds heavily marketed by UBS Puerto Rico to island residents will also likely lose value.  Some of the closed-end funds that may be affected by the Puerto Rico credit downgrades are the following:

  • Puerto Rico AAA Portfolio Based Funds I and II
  • Puerto Rico AAA Portfolio Target Maturity Fund
  • Puerto Rico Investor’s Tax-Free Funds I – VI
  • Puerto Rico GNMA & U.S. Gov. Target Maturity Fund
  • Puerto Rico Investors Bond Fund I
  • Puerto Rico Mortgage Backed & US Govt. Fund
  • Puerto Rico Fixed Income Funds I – VI
  • Tax-Free Puerto Rico Target Maturity Fund
  • Tax-Free Puerto Rico Funds I and II

Under FINRA rules, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance.  Some Puerto Rican investors reportedly were advised by UBS Puerto Rico to concentrate the majority of their investments into UBS proprietary closed-end bond funds, managed UBS, and municipal bonds.  Adding to some of these investor’s woes, UBS Puerto Rico allegedly recommend that some investors use of the UBS Puerto Rico bond funds as collateral for UBS bank loans, compounding some investors’ losses. The claimed losses total hundreds of millions of dollars.


Attorneys are available to review possible cases involving UBS Puerto Rico closed-end funds.  Investors may fill out the form on this page to arrange to discuss their possible case.  Investors may also contact the Christopher Gray firm in New York at (866) 966-9598 or 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 to advise and represent those investors who live in Puerto Rico.

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