UBS WILLOW FUND LIQUIDATES SHARES LEAVING INVESTORS WITH 20 CENTS ON THE DOLLAR

In October 2012, the UBS Willow Fund, a distressed debt hedge fund, informed investors that the fund would be liquidated after having sustained substantial losses. Formed in 2000, UBS Willow has suffered losses exceeding $300 million, which date back to 2007 - its net asset value (NAV) per share was down 80 percent upon UBS Willow's liquidation announcement. In December 2012, a class action lawsuit was filed against UBS Willow alleging a deviation from the fund's investment strategy. The lawsuit, filed in Manhattan, seeks to recover over $200 million for investors who have lost money in the fund. Meanwhile, the Law Offices of Robert Wayne Pearce, P.A. is currently investigating the broker-dealers and financial advisors that marketed and sold the product to investors. Our attorneys are researching potential claims that will hold broker-dealers and financial advisors liable for recommending UBS Willow and recover additional losses resulting from the investment.
Hedge funds are similar to mutual funds in structure. Investor money is pooled together and invested in an effort to make a positive return. However, hedge funds have more flexible investment strategies than mutual funds. Hedge funds seek to profit in all kinds of markets by utilizing strategies involving leverage, short-selling, and other speculative investment practices that are not typically used by mutual funds. Another factor that distinguishes hedge funds from mutual funds is that hedge funds are not subject to the same regulations designed to protect investors. Depending on the amount of assets in the hedge funds advised by a manager, some hedge funds may not be required to file reports with the SEC. Fortunately, hedge funds are subject to the same prohibitions against fraud as are other market participants. In addition, managers owe a fiduciary duty to the funds under management.
Broker-dealers have a duty to perform adequate due diligence, especially when offering risky investments such as hedge funds, to ensure that the investment is suitable for an individual investor's age, risk tolerance, investment experience, net worth, and investment time horizon. If broker-dealers fail to carry out this duty, they can be liable to investors for damages. In the case of UBS Willow, it is evident that financial advisors made certain misrepresentations about the product's risks and investment strategy. As a result, investors who have suffered losses are encourage to file arbitration claims to recover any losses stemming from UBS Willow.
Have you suffered losses resulting from owning shares in the UBS Willow Fund? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is actively investigating and accepting clients with valid claims against stockbrokers who misrepresented and sold the UBS Willow Fund to investors.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

THE WILLOW FUND FRAUD AND MISMANAGEMENT INVESTIGATION

In 2000, UBS Financial Services, Inc. (UBS) and Bond Street Capital (BSC) formed a closed-end mutual fund to purchase debt and other securities of distressed (near bankrupt) companies restructuring their debt financing. Since 2007, the net asset value of the Fund declined by over 300 million dollars. Some investors have lost over 85% of their initial investment capital as a result of gross misrepresentations and mismanagement of the fund.
It appears that many UBS advisors are misinformed by the company about the nature, mechanics and risks of the Willow Fund and in turn, misinformed their clients. Some of UBS's best clients invested in what they were led to believe to be a "safe" and "secure" investment with a "guaranteed income stream." They were unaware of the extensive leverage through the use of derivatives and credit swap contracts. This was a highly speculative investment and unsuitable for many of those clients with income as their primary investment objective.
The Willow Fund managers ratcheted up the risk by failing to perform the rigorous credit analysis on the company's restructuring of their debt financing. In addition, the managers failed to limit the risk positions and diversify the portfolio as represented. It appears that a gross breach of fiduciary duty and negligence occurred in the management of the fund.
Have you suffered losses resulting from an investment in the Willow Fund? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is actively investigating and accepting clients with valid claims against UBS and other stockbrokers who fraudulently offered and sold the fund to investors.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE ARE CLAIMING LOSSES AGAINST UBS FOR PRINCIPAL PROTECTED NOTES BACKED BY LEHMAN BROTHERS

Investment banking giant UBS is facing a slew of claims by investors for selling principal protected notes backed by the now defunct Lehman Brothers. UBS misrepresented the safety of the principal protected notes because it knew of Lehman's disastrous financial condition one year before Lehman collapsed. In reality, the so-called safe and guaranteed notes were loans to Lehman to help it remain solvent. UBS financial advisors were also led into believing that the notes were safe investments, which they continued to sell to investors well after Lehman's financial condition had grown worse. As a result, investors were left to be concerned with an unsuitable and risky investment that generated dramatic losses for their portfolio.

A Principal protected note is an investment contract with a guaranteed rate of return of at least the amount invested. Traditional fixed-income investments such as CDs and bonds provide investment security and modest returns with little or no risk of capital loss, while stocks have the potential to deliver greater returns, but with much greater risk. In recent years, investors have turned to structured products such as principal protected notes that offer both security and potential growth for their principal. Principal protected notes are linked to a broad range of underlying investments that may include indices, mutual funds, equities, and even alternative offerings such as hedge funds. At the heart of a principal protected note is a guarantee - typically guaranteeing 100% of invested capital, as long as the note is held to maturity. This means that regardless of market conditions, investors receive back all money they invested plus appreciation from the underlying assets, if any.

The Financial Industry Regulatory Authority (FINRA) has fined UBS $2.5 million for its sales practices with respect to Lehman structured products. FINRA also ordered UBS to pay $8.5 million in restitution to Lehman notes investors - an estimated $1 billion in Lehman notes were sold to investors. However, investors may only be able to recover as little as 10 cents on the dollar.

Principal protected notes are subject to the credit risk of the issuer. Consequently, if an issuer is not financially sound, it cannot guarantee 100% redemption of principal at maturity to an investor if the underlying investment deteriorates in value. UBS misrepresented the principal protected notes by not disclosing Lehman Brothers' association with the investment to clients, which left investors with worthless notes that could not be repaid due to Lehman's insolvency. However, investors can claim damages against UBS to recover losses for misrepresenting the nature of the notes, which mislead thousands of clients into an unsuitable and risky investment.

Have you suffered a loss in a principal protected note? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.

The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

CAN I RECOVER MY 1861 CAPITAL (MUNICIPAL ARBITRAGE) FUND LOSSES?

The 1861 Capital Municipal Enterprise Domestic Fund, LP, 1861 Capital Municipal Enterprise Offshore Fund, Ltd., 1861 Capital Discovery Domestic Fund, LP, and 1861 Capital Discovery Offshore Fund, Ltd. were so-called municipal arbitrage bond funds created by 1861 Capital Management, LLC and sold by UBS to investors nationwide. It was called an "arbitrage" fund and many investors were misled into believing that it was relatively risk free, a safe or conservative investment fund. But it was nothing of the sort. It was a highly leveraged and speculative structured credit product that many believe to have been misrepresented and mismanaged.

The so-called municipal bond "arbitrage" strategy was a very complex investment strategy involving multiple investments in the tax exempt and taxable fixed income markets. The fund managers invested in long tax exempt municipal bonds and, in effect, shorted the equivalent of taxable corporate bonds utilizing libor swap contracts and swaptions. The key to the success of the strategy was "market timing" and the "continued correlation" of the tax exempt municipal bond yields and the libor swap contract yields. It was originally used by many banks as a short term trading strategy. But many firms like 1861 Capital converted it to a flawed long term buy and hold strategy to maximize their own sales commissions and management fees.

In August 2007, the handwriting was on the wall for the "muni-arbitrage" funds. It was time to sell not buy. It was not the time to launch new funds or increase the leverage of the funds. The "continued correlation" of the tax-exempt and taxable fixed income market yields had collapsed. The lack of correlation and the high leverage was a recipe for disaster. Nevertheless the "muni-arbitrage" fund managers proceeded with the investment strategy full steam in derogation of their fiduciary duties to investors.

UBS blamed the unforeseen and unprecedented market conditions as the reason for the collapse of the so-called "muni-arbitrage" funds in 2008. Nothing could be further from the truth, the funds were rocked in August 2007 and fund managers were put on clear notice of the dangerous market conditions and risk of loss. The real cause of the collapse was the fund managers' reckless disregard of the key factors of the strategy, "correlation" and "market timing," in relation to market conditions. As a result, many investors have commenced arbitration proceedings and recovered their losses due to misrepresentations and mismanagement of the so-called muni-arbitrage funds.

The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

SEC FINES UBS AG FOR MANIPULATION OF MUTUAL FUND SALES IN PUERTO RICO

It is being reported that UBS AG will pay $26.6 million to resolve U.S. regulatory claims its Puerto Rico-based brokerage unit sold shares in mutual funds without disclosing that it was propping up the price of the funds in the secondary market.

Apparently, UBS Puerto Rico agreed to settle the SEC's charges, without admitting or denying the findings.
The SEC had alleged that UBS Financial Services Inc. of Puerto Rico, starting in 2008, solicited thousands of retail investors, saying a competitive and liquid secondary market contributed to their closed-end mutual funds' performance.

The charges further alleged that when investor demand declined, the brokerage sought to maintain the illusion of a liquid market by buying shares into its own inventory from customers who wished to exit the market. The unit later sold 75 percent of its closed-end fund inventory to unsuspecting investors, withdrawing its market price and liquidity support.

The $26.6 million sanction will be placed into a fund for harmed investors.

The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Mr. Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. Our law firm is devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

FLORIDA JUNK BOND INVESTORS--LOOK OUT!

Junk bonds have outperformed all major asset classes over the past three years. But junk bond funds are now under selling pressure. Investors have been removing money from junk bond funds at record levels recently. Levels of redemptions were at their fourth largest levels on record last week as net outflows from junk bond mutual funds and exchange traded funds amounted to $2.46 billion.

UBS reportedly said that outflows from junk bond exchange traded funds would have been even bigger were it not for short covering by traders who had bet against those ETFs. In addition, professional investors are bearish on junk bond funds. Concerns about Europe, in particular, are eroding the sentiment that drove a rally in junk bonds earlier in the year.

Individual investors looking for better yields who helped fuel the run-up are in danger if selling continues. If demand continues to erode, so will liquidity. If selling increases and liquidity dries up, fund managers will have to sell their best assets at fire sale prices to cover redemptions demands. Investors and their advisors would be well-advised to reconsider their allocation to high-yield investments.

The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Mr. Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. Our law firm is devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

WELLS FARGO, CITIGROUP, MORGAN STANLEY, UBS FINED FOR IMPROPER SALES OF HIGH-RISK ETFS NATIONWIDE

The Financial Industry Regulatory Authority (FINRA) announced that it ordered Wells Fargo Advisors, Citigroup Global Markets, Morgan Stanley, and UBS Financial Services to pay more than $9.1 million for failure to supervise and failure to have a reasonable basis for recommending selling leveraged and inverse exchange traded funds. Each of the four firms sold billions of dollars of these leveraged and inverse exchange traded funds.

The payments consist of more than $7.3 million in fines and $1.8 million in restitution to customers who purchased the leveraged and inverse exchange traded funds. The breakdown is as follows:

• Wells Fargo - $2.1 million fine and $641,489 in restitution
• Citigroup - $2 million fine and $146,431 in restitution
• Morgan Stanley - $1.75 million fine and $604,584 in restitution
• UBS - $1.5 million fine and $431,488 in restitution

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, was quoted as saying: "The added complexity of leveraged and inverse exchange-traded products makes it essential that brokerage firms have an adequate understanding of the products and sufficiently train their sales force before the products are offered to retail customers. Firms must conduct reasonable due diligence and ensure that their representatives have an understanding of these products."

In addition, FINRA found that the firms' registered representatives made unsuitable recommendations of leveraged and inverse exchange-traded funds to some customers with conservative investment objectives and/or risk profiles, some of whom held them for extended periods during January 2008 through June 2009 when the markets were volatile.

Leveraged and inverse exchange-traded funds have risks not found in traditional exchange traded funds. Those risks flow from the daily reset, leverage and compounding of leveraged and inverse exchange traded funds, which caused them to differ significantly from the performance of the underlying index or benchmark when held for longer periods of time. That was particularly true in the volatile markets that existed during January 2008 through June 2009.

The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Mr. Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. Our law firm is devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.