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UBS to pay $15 million settlement over Puerto Rican bonds

Wednesday, September 30, 2015
Opalesque Industry Update - UBS Puerto Rico will pay a $15 million settlement to UBS over mishandling of its Puerto Rican bond investments and causing harm to investors.

According to the SEC, UBS Puerto Rico was the underwriter for bonds that the country was attempting to sell on the open market in order to raise money for the retirement system. Those bonds failed to sell and so UBS packaged them into its own mutual funds which it sold to locals as retirement income.

The $15 million will go into a fund for investors harmed through this practice.

Separately, the SEC filed a complaint in federal court in Puerto Rico against Jose Ramirez, Jr., a former registered representative in UBSPR’s Guaynabo branch office. The SEC alleges that Ramirez increased his compensation by at least $2.8 million by having certain customers use proceeds from lines of credit with UBS Bank USA to purchase additional shares in UBSPR closed-end mutual funds.

FINRA is bringing separate charges against UBS Puerto Rico and the firm will pay a $7.5 million fine and interest on up to $11 million in restitution to more than 150 investors in the closed-end funds.

The full text of all of the complaints involved is available here.

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