Brokers in Product Cases Can Be Victims Too

It is no secret on Wall Street today of what is happening in Puerto Rico in connection with the devastation of the UBS Puerto Rican Closed End Bond Funds.  For many on the island and others in the 50 states, it is a whopper of a problem.

Any time there is a complete catastrophe with a product, such as there is in Puerto Rico, two sets of victims emerge.

The first is the investors who were likely misled and as a result have lost significant portions of their life savings.

Another, often overlooked, set of victims is the brokers/financial advisors who sold the product.  Frequently, brokers in situations like this are not given complete information and are misled themselves.  Firms may even have high pressure sales meetings, threatening brokers that they will lose their jobs, or their bonuses or their book of business if they do not sell the firm’s toxic product.

After the product “blows up” those brokers then can find themselves looking for answers from their firm as to why they were treated this way.  As these brokers find themselves subject of multiple lawsuits and customer complaints, the prospects of finding a job elsewhere in the securities industry disappear.  This can leave someone in that position completely devastated, with few options to provide for themselves and for their families.

The firm is frequently the party responsible in such situations, including those in upper management, who failed to properly inform the brokers on features and risks of the product, or worse, misled them completely.  The head of UBS Puerto Rico, Miguel Ferrer has come under scrutiny by the SEC.  In In the Matter of Ferrer, a case held before ALJ Brenda P. Murray, Miguel Ferrer, who at the time worked for UBS as a Chairman, Chief Executive and Vice-Chairman, was accused of acting with scienter, negligently making misrepresentations, or omitting material information in emails and memos sent to brokers regarding UBS’s Puerto Rican Bond Funds.

Brokers who are victims in product cases are not without hope.  Brokers who have been misled and mistreated by their firm in the case of a toxic product may be able to sue the firm in FINRA Arbitration. In arbitration, brokers may be able to have their CRD records expunged, and recover for lost earnings as a result of losing their job and their book of business.

Malecki Law is experienced in representing registered brokers and financial advisors in expungement proceedings and in arbitrations for lost wages and compensation against the current or former firm.