Gray Firm Files FINRA Claim Concerning UBS Puerto

NEW YORK, Oct. 3, 2013 (GLOBE NEWSWIRE) -- Law Office of Christopher J. Gray, P.C., a New York City law firm handling arbitration claims on behalf of investors throughout the United States, has filed a Financial Industry Regulatory Authority ("FINRA") arbitration claim involving a retiree's investment in a closed-end fund known as Puerto Rico Fixed Income Fund I (CUSIP No. 744907106, hereinafter "Fund I"). The fund was structured by UBS Puerto Rico, a unit of the Swiss banking giant UBS AG (NYSE: UBS ).

The arbitration claim alleges that Fund I was sold by Merrill Lynch as one of a group of safe mutual funds that were largely invested in municipal bonds issued by the Puerto Rico government. The closed-end funds such as Fund I are solely for sale to residents of Puerto Rico and have reportedly been heavily marketed there by UBS and other brokerage firms (including Merrill Lynch) for at least the past 5 years. Several of the 23 closed-end funds in question have reportedly lost over half their value, despite being marketed as safe investments.

The New York Times Dealbook blog reports that some UBS customers were encouraged by its brokers to borrow money to invest in these funds and that in some cases, money was lent improperly, exacerbating current losses. A number of UBS clients have reportedly been forced to liquidate hundreds of millions of dollars in holdings in these funds to meet margin calls. Robert Mulholland, the head of wealth management advisers in the Americas for UBS, reportedly characterized the closed-end fund issue as "the perfect storm" in a meeting in San Juan last month.

Fund I and the other UBS closed-end funds at issue were heavily exposed to Puerto Rico government-issued bonds that carried substantial risks. Now that the underlying municipal bonds have lost value, the closed-end funds have lost significant value due to their leveraged exposure to the underlying municipal bonds as well as selling pressure in the market for the funds. Shares that steadily paid dividends and appeared to maintain their value for several years have suddenly collapsed in value. In the case of Fund I, shares were shown on customer statements as worth $8.55 a share as late as July 2013. By early September 2013, the value of the Fund I shares had dropped from $8.55 a share to $6.06. As of October 1, 2013, the price of Fund I shares had dropped further to $3.738. 

Other UBS closed-end funds are believed to have suffered similar drops in value.

Other UBS Puerto Rico funds concerning which investors may wish to consider filing arbitration claims include the following:

• Puerto Rico AAA Portfolio Based Funds I and II
• Puerto Rico AAA Portfolio Target Maturity Fund
• Puerto Rico Investor's Tax-Free Funds I – VI
• Puerto Rico GNMA & U.S. Gov. Target Maturity Fund
• Puerto Rico Investors Bond Fund I
• Puerto Rico Mortgage Backed & US Govt. Fund
• Puerto Rico Fixed Income Funds I – VI
• Tax-Free Puerto Rico Target Maturity Fund
• Tax-Free Puerto Rico Funds I and II

Attorneys at Law Office of Christopher J. Gray, P.C. are available to review possible cases involving UBS Puerto Rico closed-end funds.  Investors may contact the firm at (866) 966-9598 or newcases@investorlawyers.net for a confidential, no-obligation consultation. Additional information concerning FINRA arbitration claims is accessible at www.investorlawyers.net .

(866) 966-9598