Malecki Law Announces The Filing of A $10 Million FINRA Claim Against UBS On Behalf Of Two Former UBS Puerto Rico Brokers

Malecki Law announces the filing of a $10 million FINRA arbitration claim against UBS Financial Services, Inc. and UBS Financial Services Incorporated of Puerto Rico (collectively “UBS”) on behalf of former UBS Puerto Rico registered representatives, Jorge Bravo and Teresa Bravo (the “Bravos”).

In the Statement of Claim filed with FINRA, the Bravos allege that through its management (including Miguel Ferrer, Robert Mulholland and Carlos Verner Ubinas Taylor) UBS misled both its brokers and its customers about the UBS Puerto Rican closed-end funds.  In their pleading, the Bravos accuse UBS of threatening, deceiving and coercing its brokers, including them.

Specifically, the Bravos allege that they were lured away from their prior firm by UBS under the false pretense that UBS could and would help them better serve their clients.  UBS was allegedly engaged in a fraudulent course of conduct in material conflict with both its customers and its brokers, unbeknownst to the Bravos.  Over the three years they were registered with UBS, the Bravos allege that they were repeatedly and fraudulently mistreated and misled by UBS for UBS’s own benefit, until being unceremoniously forced out by the firm.

In their filing with FINRA, the Bravos allege that UBS chose to deceive its customers to protect itself, its business and its revenue stream stemming from the Puerto Rican closed-end funds.  Allegedly motivated by its own self-preservation, UBS management is claimed to have engaged in a concerted effort to artificially preserve the viability of the market for the Puerto Rican closed-end funds.  To do so, UBS allegedly made material misstatements and omissions to both brokers and customers about the closed-end funds, UBS’s internal analysis of the closed-end funds and its assessment of the market for the closed-end funds, which they controlled.   UBS had reportedly settled charges with the SEC in 2012 for its misconduct in the Puerto Rican closed-end fund market in and around the years 2008-2009.   To settle those charges, UBS reportedly paid $26.6 million.

According to the Statement of Claim, both before and after the settlement with the SEC, UBS created a high pressure environment to induce brokers, including the Bravos, to find more assets and sell the Puerto Rican closed-end fund products, or else face termination.  The Statement of Claim cites to a recent article published by Reuters about a newly uncovered recording of Miguel Ferrer driving reluctant brokers to sell the Puerto Rican closed-end funds.  The Bravos allege that such high pressure tactics towards brokers and threats against their jobs were common at UBS during their time there.

The Bravos do not only allege that they were misled and induced into selling the Puerto Rican closed-end funds to their clients.  According to the Statement of Claim, Ms. Bravo was duped into purchasing $100,000 worth of the Puerto Rican closed-end funds for her own personal brokerage account at UBS, resulting in losses.

Ultimately, the Bravos allege that as a result of UBS’s willful and tortious misconduct, their business has been devastated, and their abilities to earn in the future have been irreparably compromised.  Therefore, the Bravos allege that UBS is liable to them for causes of action arising out of fraud, fraudulent misrepresentation, breach of the duty to inform an agent, negligence, negligent misrepresentation, tortious interference with business relationships and economic advantage, breach of contract, and violations of Puerto Rico Law 80.

The Bravos have requested a FINRA arbitration panel award them no less than $10,000,000 in compensatory damages. Their Statement of Claim also asks the arbitration panel to award the Bravos punitive damages, above and beyond their compensatory damages, to punish UBS for its conduct.

Notable are the striking similarities in the above alleged scenario and those allegations previously made against UBS by the SEC in the wake of the recent auction rate securities (ARS) collapse, for which UBS reportedly entered into a $22.7 billion settlement with the SEC.  In both cases, allegations were made that UBS placed its own interests above those of its customers – and in the case of the Bravos – its brokers, too.


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