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Thursday, Oct 3
UBS blows up Puerto Rican clients
- It's a big black eye for UBS and something worse for many of its wealthy clients in Puerto Rico. Many like to shelter their millions in local municipal bond funds, and piled into highly leveraged ones run by the bank; brokers encouraged clients to borrow on top of that, upping leverage even more.
- Now come the margin calls and investigations, and one broker has already been put on leave.
- Plenty of big banks do business in Puerto Rico, but UBS is one of the only ones with a big team of brokers there and boasts it manages money for half of the island's millionaires.
- "When you add leverage on top of leverage, and then add more leverage, it usually doesn’t end well,” says Thomas Ajamie, a lawyer who represents clients in these sorts of cases, and presumably is about to have his phone start ringing.