UBS Hit with $4.88 Million Puerto Rico Arbitration Award
(Corrects penultimate paragraph to say that arbitrators did not grant attorneys’ fees to the complainants.)
A divided arbitration panel has ordered UBS Wealth Management to pay a couple and two family members $4.88 million over the sale of Puerto Rico bonds and closed-end funds, the latest in a long-running series of awards related to sales made as the U.S. territory headed toward the equivalent of municipal bankruptcy in 2013.In May, a separate panel ordered UBS Financial Services and its Puerto Rico affiliate to pay $7.8 million to a couple and their business over a similar issue.
In addition to asserting fraud and breach of contract and fiduciary duty claims that are typical in such cases, customers alleged that UBS advisers used “unsolicited lines of credit to purchase” additional Puerto Rican securities in their accounts, according to the July 12 decision posted on Finra’s arbitration award site.
Douglas McLaren, the chairman of the three-person, all-public arbitration panel that held 23 hearing and pre-hearing sessions in San Juan, dissented as to the amount, or “quantum,” of the award, according to the document.
The dissent is not precedential, the award said, as is typical of Finra arbitration awards.
UBS has been involved in more claims than any other bank that was operating in Puerto Rico at the time of its economic collapse, according to Securities Litigation and Consulting Group, an expert witness firm that works with investors. The Swiss bank had resolved $1.9 billion of the $2.9 billion in claims that had been filed as of March 31, according to its first-quarter earnings report, and has almost 800 additional claims pending.
The most recent case awarded $4.81 million in compensatory damages to Esther Mundafort and Roberto Fuertes, and to Adriana Fuertes and Camelia Fuertes, who filed their claims in September and October 2017. At the close of the hearings, they had requested total damages of $12.06 million, according to the award document.
The arbitration panel also ordered the UBS broker-dealers to cover the complainants’ almost $68,000 in costs and to reimburse their $750 filing fee.
The customers’ request for attorneys’ fees was denied.
UBS had requested that the claims be dismissed with prejudice and that the Fuertes family pay all fees. A UBS spokesman declined to comment on the decision.