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Finra Arb Panel Orders UBS to Pay $4.8M over Puerto Rico Bond Sales

By Alex Padalka May 17, 2021

A Financial Industry Regulatory Authority arbitration panel has ordered UBS to pay close to $5 million in another claim related to the company’s sales of Puerto Rico bonds.

The complaint, filed in San Juan, Puerto Rico, in July 2019, accuses UBS Financial Services and UBS Financial Services of Puerto Rico of breach of fiduciary duties, breach of contract, unsuitability and unauthorized trading, among other infractions. The claims are connected to purchases of UBS closed-end funds containing Puerto Rico bonds as well as the allegedly unauthorized use of lines of credit and margin in the claimants’ accounts, according to a Finra award document published last week.

In all, claimants Eugenia Fidalgo Gutierrez, Mercedes Fidalgo Gutierrez and Fidalgo Gutierrez Holding sought around $15 million in compensatory damages and any other relief deemed just by the arbitrators, Finra says.

In response, UBS sought the dismissal of the claims and the expungement of all reference to the matter from the Central Registration Depository records of Miguel Pascual and Eduardo Gonzalez, who were not named in the complaint, according to the award document. The claimants did not raise objections to the expungements, Finra says.

Last week, the arbitrators ordered UBS and UBS Puerto Rico to pay the claimants close to $4.8 million in compensatory damages and $9,768 in expert witness fees and denied UBS’ request to expunge the financial advisors’ records, according to the award document.

UBS, which sold more than $10 billion worth of funds invested in Puerto Rico bonds before the market in the bonds collapsed in 2013, has been involved in several Finra arbitration cases related to those sales. The firm has been ordered to pay millions of dollars to investors as a result of those claims, but in some cases, Finra arbitrators have granted expungement requests.

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Tags:  Regulatory/legal issues , UBS Financial Services , UBS , Financial Industry Regulatory Authority

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