UBS To Nominate Executive from BlueMountain Hedge Fund That Challenged Puerto Rico Law on Debt Restructuring to Its Board

UBS, AG (UBS) says that it intends to nominate BlueMountain Capital Management Executive Jes Staley to its board in May. Staley formerly served as a JPMorgan Chase & Co. (JPM) executive.

In a statement, UBS Chairman Axel Weber said that Staley is perfect for the role due to his professional expertise from working in global banking leadership roles for three decades. However, that may not be the only reason.

Earlier this year, BlueMountain, which is a New York-based hedge fund, joined a legal challenge against a law that would let some of the Commonwealth of Puerto Rico’s agencies restructure their massive debt. UBS Puerto Rico (UBS-PR) is one of the banks accused of inappropriately placing clients’ money into closed-end funds that had high exposure to Puerto Rico municipal bonds.

When the bonds fell significantly in value last year, many investors sustained huge losses. Since then, UBS has been subject to hundreds of bond fraud arbitration cases by investors seeking to get their money back. Many claimants are alleging that the firm marketed Puerto Rico bonds to them even though the investments were unsuitable.

Following a recent meeting between officials of Puerto Rico’s power utility and investors, the prices on the territory’s bonds hit a record low. Puerto Rico Electric Power Authority is seeking to restructure $8.6 billion of debt. Under an agreement with creditors to pay back bank loans, PREPA has to submit a five-year strategic plan. The utility company recently presented an unfinished business plan. PREPA has told investors that they want more time to restructure.

On Tuesday, Puerto Rico general obligations set to mature in 2035 traded at around 84 cents on the dollar, which is the lowest it has traded since their original sale in March.

Puerto Rico Bond Fraud
In addition to representing investors who purchased securities from UBS, our Puerto Rico municipal bond fraud attorneys at Shepherd Smith Edwards and Kantas LTD LLP represent customers that bought securities from Merrill Lynch (MER), Banco Popular, and Banco Santander (SAN). Our investigation has uncovered many investors who lost much of their savings in Puerto Rican debt, with some of them seeing their life savings completely wiped out.

Shepherd Smith Edwards and Kantas, LTD LLP represents investors in both the U.S. and in Puerto Rico. Please contact our muni bond fraud lawyers today and ask for you free case consultation.

Puerto Rico Debt Sets Record Low After Utility Meets Investors, Bloomberg, December 16, 2014

UBS Nominates BlueMountain Executive Jes Staley to Board, The Wall Street Journal, December 17, 2014

More Blog Posts:
Puerto Rico’s Prepa Sees 219% Rise in Overdue Accounts With At Least $1.75 Billion Owed, Stockbroker Fraud Blog, November 18, 2014

Investors File Close to $1B of Puerto Rico Bond Fraud Claims against UBS, Stockbroker Fraud Blog, October 9, 2014
Hedge Funds Are Moving in on Municipal Debt, Including Puerto Rico Debt, Institutional Investor Securities Blog, November 15, 2013