The former UBS employee is José Ramirez, a financial adviser who was fired last year, according to a person familiar with the matter. Mr. Ramirez, sometimes known by the nickname the “Whopper,” has previously been the target of civil claims that he advised clients to take loans from UBS to buy funds from the bank underpinned by Puerto Rico debt securities that lost value, despite the terms of the loans barring their use to purchase securities.
In a filing on Tuesday, Zurich-based UBS confirmed the Justice Department’s inquiry, and also disclosed for the first time that the Financial Industry Regulatory Authority, or Finra, and the Securities and Exchange Commission have made related information requests about clients’ use of loans to buy the UBS funds.
UBS said it is cooperating with the investigations.
An attorney representing Mr. Ramirez said in a statement that any suggestion about the specific targets of the Justice Department inquiry would be “sheer speculation.”
“Business and personal reputations are precious,” the attorney, Guillermo Ramos-Luiña said. “Mr. Ramirez and I are not going to make comments that could tarnish anyone’s reputation.”
A spokeswoman for the U.S. Attorney’s Office in Puerto Rico declined to comment.
UBS customers have previously filed civil claims against UBS and Mr. Ramirez, alleging that they have lost significant amounts of their savings after being advised to borrow money to buy the bond funds. According to Mr. Ramirez’s record as a broker with Finra, he received a so-called Wells notice from the SEC in March, notifying him that the regulator was considering civil charges that he had violated parts of the Exchange Act and the Securities Act.
A separate customer dispute in the Finra record notes that a client alleged that in 2013 he gave Mr. Ramirez $250,000 to pay down a loan, which was then instead used to purchase more funds. The record indicates that this complaint was denied.
Mr. Ramirez’s attorney declined to comment on Mr. Ramirez’s Finra record.
Puerto Rico has emerged as the source of significant legal trouble for UBS. Its problems there began in 2013, with a decline in the value of bonds issued by the financially troubled commonwealth. That led to a wave of complaints from customers who had purchased funds that included the debt, and now to a number of regulatory probes.
According to UBS, the information requests from the SEC and Finra have related to clients’ use of loans to invest in the Puerto Rico bond funds, and to “supervision issues.”
The Justice Department’s criminal inquiry is focused on “the practice of certain customers and a UBS financial adviser of using non-purpose loans to invest in closed-end fund securities in violation of their loan agreements,” the bank said in its Tuesday filing.
Complaints and arbitrations stemming from its issues in Puerto Rico have led to claimed damages that now amount to more than $1.1 billion, UBS said in the filing.
Last month, Puerto Rico Gov. Alejandro Garcia Padilla said the commonwealth would have to delay payments to bondholders for “a number of years.” That, UBS said in the filing, may only increase the number of claims filed against the bank.
Write to John Letzing at john.letzing@wsj.com
By John LEZING
No comments:
Post a Comment