Claim Against UBS & Merrill Lynch for Puerto Rico / UBS Losses

Sonn Law Group and Aldarondo & Lopéz Bras recently filed a claim against UBS Financial Services, Inc. and UBS Financial Services Inc. of Puerto Rico (“UBS”) and Merrill Lynch, Pierce, Fenner & Smith, Inc., on behalf of an elderly couple and their business for more than $1.1 million in losses related to UBS/UBS-PR branded Puerto Rico Funds and Puerto Rico bonds. Aldarondo & Lopéz Bras is a separate law firm only licensed to practice law in Puerto Rico.

The 84-year-old husband and 75-year-old wife have been married for 56 years. For the past 36 years, the husband has owned a construction company specializing in roads, pipes, and building refurbishing. The couple have been long-time clients of their broker and then his son, also a broker, first at UBS and then Merrill Lynch. The couple entrusted a significant portion of their life savings and the company savings to UBS, then Merrill Lynch, where, despite the couple’s age and risk aversion, their brokers recklessly recommended the couple concentrate their accounts in Puerto Rico debt including high risk and unsuitable Closed End Funds (“CEF’s”) that invested in Puerto Rico bonds, as well as direct investments in Puerto Rico bonds.

When the couple required money to purchase an apartment and a car, their broker allegedly recommended that they take out a loan secured by their investments from Bank of America. The broker allegedly told the couple the interest rate on the loan was lower than traditional rates, and assured the couple not to worry because their investments were secure and low risk. Bank of America was not licensed to do business in Puerto Rico and any such recommendation by a Merrill Lynch broker to borrow money from Bank of America was implicitly unsuitable and fraudulent, according to the Statement of Claim.

Because the CEFs’ prices stayed relatively stable until summer of 2013, the couple had no significant losses and believed the CEFs were relatively safe investments. In August and September 2013, however, the CEFs plunged in value, and by February 2014, the ratings agencies had downgraded Puerto Rico’s debt to “junk” status or speculative (below investment grade). When the husband contacted the broker to discuss the drop in value, the broker failed to recommend that couple sell any of the CEFs or Puerto Rico bonds. The couple ultimately sustained losses of more than $1.1 in the CEFs and Puerto Rico bonds.

Dozens of other investors have retained Sonn Law Group and Aldarondo & Lopéz Bras to pursue claims against the firms who sold the investments to them. While UBS dominates the island’s market through its UBS Family of Funds, some of which are co-managed with Popular Securities, Banco Santander (Santander Securities), Merrill Lynch, Raymond James, Oriental Bank and others also sold investments linked to Puerto Rico’s municipal debt. Claims for investment losses against UBS and other brokerage firms must be arbitrated through the Financial Industry Regulatory Authority (“FINRA”), the largest dispute resolution forum in the securities industry.

If you invested in Puerto Rico funds or Puerto Rico bonds, were a client of UBS or MerrillLynch, or obtained a loan from UBS Bank or Bank of America secured by your investments, and have experienced financial losses, please call us at 866-507-2640 or complete our “contact form.” Sonn Law Group is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies.