An arbitration panel of the Financial Industry Regulatory Authority (“FINRA”), has entered an Award of over $564,000, plus interest, against UBS Financial Services, Inc. and UBS Financial Services, Inc. of Puerto Rico following a customer arbitration against the firms.
The customer’s claims included allegations of violations of federal and Puerto Rican securities acts, breach of contract, fraud, breach of fiduciary duty, and negligence involving Wells Fargo’s sale of investments including Puerto Rico municipal bonds and closed-end bond funds.
The claimant requested compensatory damages in excess of $500,000 to recoup their investment losses. The FINRA panel of arbitrators awarded the claimant compensatory damages of $435,623.33, plus post-judgment interest, $102,000 in attorneys’ fees, $26,936.49 in costs, ordered UBS Financial Services, Inc. of Puerto Rico to repurchase almost all of the securities in Claimant’s account, and denied UBS’s request for expungement of the records of the stockbrokers involved in the conduct at issue.
FINRA enforcement previously fined UBS Financial Services of Puerto Rico $18.5 million for its supervisory failures with respect to the sales of Puerto Rico municipal bond closed-end fund shares.
FINRA discovered that for over four years, UBS Financial Services of Puerto Rico had failed to monitor customer accounts to ensure that Puerto Rico bond and bond fund transactions were suitable given the customers’ risk objectives and profiles. UBS likewise failed to implement a reasonably designed system to identify and prevent unsuitable transactions in light of the unique Puerto Rican economy. UBS was ordered to pay $11 million in restitution to help offset customer losses in the funds.
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