Fernandez v. UBS AG

Court: United States District Court, Southern District of New York
Case Number: 1:15-cv-02856-SHS
Judge: Judge Sidney H. Stein
Class Period: 5/5/2008 - Present
Case Contacts: Gerald H. Silk, Hannah Ross, Jeremy P. Robinson, Adam Hollander

This is a class action filed on behalf of Puerto Rico residents and a class of similarly situated persons who were invested in one or more 23 closed-end mutual funds (the “Funds”) sponsored or co-sponsored by UBS Financial Services Incorporated of Puerto Rico (“UBS Puerto Rico”) and Banco Popular de Puerto Rico (“Banco Popular”) between May 5, 2008 to the present (the “Class Period”).  Defendants include UBS AG; UBS Financial Services, Inc.; UBS Puerto Rico; UBS Trust Company of Puerto Rico; UBS Bank USA; Carlos V. Ubiñas; and Miguel A. Ferrer (collectively, the “UBS Defendants”); and Banco Popular de Puerto Rico and Popular Securities, Inc. (collectively, the “Popular Defendants” and, together with the UBS Defendants, “Defendants”).

The Complaint, which was filed on May 8, 2015, alleges that Defendants improperly steered Class members, most of whom are older individuals focused on preserving their capital and generating income for retirement, to invest in the Funds without regard to their suitability, and in violation of their fiduciary and contractual obligations.  Specifically, the Complaint asserts that during the Class Period, Defendants pushed Class members to invest in the Funds, which Defendants portrayed as safe, secure, “fixed income” securities that would preserve Class members’ principal investments, pursuant to a uniform policy intended to maximize fees and commissions for Defendants.  In addition, Defendants increased the risks and leverage of these investments – and earned additional fees – by issuing loans to Class members that were secured by the Funds, and pushing Class members to use loan proceeds to purchase even more Fund shares.  In fact, the Funds were “ticking time bombs” – highly-leveraged, volatile, high-risk investments – that eventually plummeted in value beginning in mid-2013, causing billions of dollars in losses.

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