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Class Certification Denied to Investors of UBS in Puerto Rico

A group of investors were denied class certification after claiming that UBS AGs Puerto Rican affiliate ("UBS Puerto Rico" or the "Company") downplayed the risks involved in investing and operated in a manner that twisted the market to allow the Company more control over its closed-end mutual funds. U.S. District Judge Carmen Consuelo Cerezo concurred with U.S. Magistrate Judge Bruce J. McGiverin, who recommended the denial of class certification saying that each individual investor needed to show that they relied on the alleged misstatements.

Investors alleged that UBS Puerto Rico failed to disclose that it was manipulating the price of the funds, and that it was buying and selling fund shares in order to ensure that prices remained high. When regulators became involved, the funds value plummeted, causing investors to lose large sums of money, which they claim was due to UBS Puerto Rico's deceptive information. The Company had previously been fined by the U.S. Securities and Exchange Commission in 2012 for related activities.

Judge McGiverin noted that had the proposed class claimed UBS Puerto Rico withheld information from investors, rather than claiming they relied on information the Company used to mislead them, then the claims would allow for class certification. The investors believe the complaint sufficiently claimed UBS Puerto Rico withheld information, which they hope will be made more apparent during further appeal.

The legal team at SFMS has significant experience litigating securities matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier (nlussier@sfmslaw.com) or Chiharu Sekino (csekino@sfmslaw.com). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS is an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

Source: Godoy, Jody. "Investors In UBS Puerto Rico Funds Denied Class Status." Law360. Portfolio Media, Inc. 4 Oct. 2016. Web.

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