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Puerto Rico Municipal Bonds and Closed-End Bond Funds

UBS Puerto Rico has reported huge losses in multiple proprietary closed-end bond funds. Offering documents for UBS Puerto Rico Fixed Income Funds (“Funds”) frequently characterized the Funds’ investment objective as current income consistent with the preservation of capital.  However, many of these Funds utilized leverage to bolster performance. Many of these closed-end bond funds are now suffering
massive losses and declining bond prices. These funds were frequently sold to conservative investors or retirees seeking income. Some investors were encouraged to borrow money to purchase these Funds. As of September 30, 2012, UBS Asset Managers of Puerto Rico (“UBS”) either managed or co-managed over 10 billion dollars in fund assets.

According to a Reuter’s news story, UBS, Santander Securities, and Popular Securities operate closed-end bond funds concentrated in Puerto Rico bond holdings that suffered losses. Many investors now question how their advisors could have recommended these investments as a core position in their portfolios.  Other investors are seeking damages from the selling brokerage firm.

UBS Financial Services of Puerto Rico reported the Net Asset Values for the following closed-end funds managed solely by UBS Asset Managers as of February 19, 2014:

  • Puerto Rico Fixed Income Fund, Inc. ($3.156)
  • Puerto Rico Fixed Income Fund II, Inc. ($3.713)
  • Puerto Rico Fixed Income Fund III, Inc. ($3.611)
  • Puerto Rico Fixed Income Fund IV, Inc. ($4.639)
  • Puerto Rico Fixed Income Fund V, Inc. ($3.975)
  • Puerto Rico Fixed Income Fund VI, Inc. ($4.947)
  • Tax Free Puerto Rico Fund, Inc. ($4.843)
  • Tax Free Puerto Rico Fund II, Inc. ($4.215)

UBS Financial Services of Puerto Rico reported the Net Asset Values for the following closed-end funds managed by UBS Asset Managers and Popular Asset Management as of February 19, 2014:

  • Puerto Rico Investors Tax-Free Fund, Inc. ($3.81)
  • Puerto Rico Investors Tax-Free Fund II, Inc. ($3.66)
  • Puerto Rico Investors Tax-Free Fund III, Inc. ($4.09)
  • Puerto Rico Investors Tax-Free Fund IV, Inc. ($3.56)
  • Puerto Rico Investors Tax-Free Fund V, Inc. ($3.96)
  • Puerto Rico Investors Tax-Free Fund VI, Inc. ($4.70)
  • Puerto Rico Investors Bond Fund I, Inc. ($4.14)

All of these Funds are now suffering large losses.  According to news reports, many investors are expected to file FINRA arbitration claims in an attempt to recover their losses.

If you have questions about your legal rights, or have been the victim of investment fraud, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or Toll Free at (855) 755-4799.

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