Tuesday, September 17, 2019

Finra Dismisses Aeela’s $70-Million Claim Against UBS

By on May 23, 2016

SAN JUAN–The Financial Industry Regulatory Authority (Finra) threw out in its entirety a claim filed by the Commonwealth Employees Association (Aeela) against UBS Financial Services Incorporated of Puerto Rico, UBS Financial Services, Inc. and UBS Trust Company of Puerto Rico seeking $70 million.

53d7bda895c57f81fcdbc929f8bad63a“After considering the pleadings, the testimony and evidence presented at the hearing, and the post-hearing submissions (if any), the Panel has decided in full and final resolution of the issues submitted for determination as follows:  Claimant’s Statement of Claim is denied in its entirety. Any and all claims for relief not specifically addressed herein, including Claimant’s request for punitive damages and attorneys’ fees, are denied,” Finra ruled.

After enduring losses between 2010 and 2012 in the bond market, Aeela filed a claim in the amount of $70 million in 2014 arguing that the losses were caused by poor advice provided by UBS in managing the organization’s investment portfolio. 
Aeela and UBS had entered into a consulting agreement in which UBS agreed to provide various financial services to manage around $650 million in assets.

Aeela accused UBS of breach of fiduciary duty; negligence and gross negligence; violation of Article 1802 of the Civil Code of Puerto Rico; fraud and constructive fraud; failure to supervise and control; breach of contract; violation of Section 10(B) of the Securities Exchange Act, violation of Finra Rules; violation of the Investment Advisers Act of 1940; and violations of the Puerto Rico Uniform Securities Act [10 L.P.R.A. § 890]. The causes of action relate to losses in Aeela’s investment portfolio with UBS which were allegedly caused by unsuitable recommendations of Puerto Rico government debt.

UBS claimed that Aeela’s losses took place after 2012 after UBS had stopped providing services. Aeela, in fact, had another consulting firm in 2013.

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