It appears as if the Commonwealth of Puerto Rico is headed for another tough year financially, as investors say UBS Financial Services Inc. played a significant role in the loss of billions of dollars in closed-end municipal bond funds.
Edward S. O'Neal, a principal with the Securities Litigation and Consulting Group, told Investment News that the worst performing UBS PR funds lost between 38 to 48 percent over the past year. Those funds were sold almost exclusively to Puerto Rican citizens and were invested in local securities.
The losses so far have left many investors considering a UBS Financial Services, Inc. lawsuit. The company did recently offer to buy back shares of the failing bonds.
And in 2012, it paid a $26.6 million settlement following claims that two UBS executives based in Puerto Rico made misleading statements to investors.
However, it remains unclear whether these moves will be enough to appease those who lost money and prevent any type of lawsuit from going forward in the future.
Meanwhile, many financial companies, including Moody's, are warning that Puerto Rico's bonds could be downgraded to junk status this year.
An article in Forbes recently noted that due to the huge fiscal losses, Puerto Rico could become America's Greece.