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Robert W Pearce
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Mr. Pearce has tried, arbitrated and mediated numerous disputes involving complex securities, commodities, administrative, contract, commercial, business tort and employment law issues for over 30 years. He has represented hundreds of clients in Federal and state courts (trial and appellate) as... More
My company:
The Law Offices of Robert Wayne Pearce, P.A.
My blog:
The Investor's Rights Law Blog
  • SEC JUDGE GIVES UBS PUERTO RICO EXECUTIVES A PASS ON FRAUD CHARGES 0 comments
    Nov 14, 2013 4:44 PM

    In a 95 page Opinion publicly distributed today, SEC Administrative Law Judge Brenda P. Murray found that UBS Puerto Rico executives, Miguel A. Ferrer ("Ferrer") and Carlos J. Ortiz ("Ortiz") did not violate the Federal Securities Laws in connection with a narrow set of alleged misrepresentations and omissions allegedly made during 2008-2009 about the UBS Puerto Rico Closed End Bond Funds (the "Funds"). Specifically, the Judge decided that Ferrer and Ortiz did not make misrepresentations or omissions:

    1. At an April 24, 2009 interview printed in "El Vocero" about how UBS Puerto Rico priced the Funds, the growing illiquidity in the secondary market and the fact that UBS Puerto Rico was dropping prices below open customers sell orders to achieve a mandatory inventory reduction;
    2. At a sales presentation to financial advisors on January 21, 2009 about market conditions and the supply and demand and imbalance in the Funds;
    3. At a sales presentation to financial advisors and customers at the March 31, 2009 investor conference about the illiquidity of the Funds;
    4. Within the Fixed Income Fund VI Prospectus and the 2008 and 2009 Family Funder Brochures with respect to the pricing of the Funds and the firm's decision not to make a market in the Funds;
    5. Relating to a list of Fund prices published in El Vocero in 2008 and 2009 by not disclosing the prices included sales commissions and were different from what the trading desk offered; and
    6. By representing the Funds as profitable, safe and stable investments and that supply and demand were responsible for the Fund prices in 2008 and 2009.

    Further, the Judge found that the UBS Puerto Rico executives did not mislead the FAs and violate their fiduciary duties to customers when they lowered the Fund prices below open customer orders to sell UBS Puerto Rico shares from inventory.

    The only saving grace to this bad decision is that the Judge's conclusions were limited to a specific set of misrepresentations and omissions during a limited time period. The Judge's opinion has no bearing on the current crisis relating to the UBS Puerto Rico Closed End Bond Funds. It has no bearing on the UBS brokers' sales practice violations including the recommendation of excessive concentrations of the Funds in client's accounts. It has no bearing on the recommendation of the use of margin and/or non-purpose loans to purchase the Funds in client's accounts. In short, the Judge's opinion has no bearing on the individual suitability claims that UBS and its brokers will face in the onslaught of arbitrations to be filed by thousands of investors.

    The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.

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