Switzerland-based UBS is facing a lawsuit by older investors who accused the bank for misguiding them into investing in mutual funds that hugely invested in Puerto Rico bonds, which busted later, forcing them to sustain heavy losses.
A complaint filed in Manhattan federal court said that the bank encouraged them to invest in riskier Puerto Rico government bonds, costing most of their life savings and causing billions of dollars of losses, as reported by Reuters.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The court case also claimed that UBS viewed the 23 closed-end funds as "cash cows," and generated tens of millions of dollars of extra fees by stuffing them with Puerto Rico government bonds it underwrote.
The lawsuit seeks class-action status covering thousands of people mainly in their 50s and older, Daniel Berger, a partner at Grant & Eisenhofer who represents the plaintiffs, told the publication.
"UBS was in a superior position to know about the risks of investing in these funds."
"UBS took advantage of its clients by putting them in mutual funds that it portrayed as safe, secure and not risky. Under Puerto Rico law, it had a fiduciary duty to act in its clients’ best interest, not UBS’ best interest, and it didn’t," Berger added.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData
