The Swiss bank UBS has agreed to pay about $34 million to resolve charges by federal financial regulators that the bank failed to adequately supervise the sale of investments in troubled Puerto Rico mutual funds, the New York Times reported today. At issue are a series of UBS mutual funds that are heavily invested in Puerto Rico municipal bonds and that used high amounts of leverage to lift returns. With the island in the midst of an unprecedented restructuring, the mutual funds have collapsed in value, decimating the retirement savings of thousands of Puerto Rico residents. The agreement with the Securities and Exchange Commission settles charges that a UBS branch manager, Ramiro L. Colon III, in Puerto Rico, did not monitor the sale of the mutual funds to everyday Puerto Ricans. The bank was also fined on Tuesday by the Financial Industry Regulatory Authority for failing to monitor the amount of borrowed money and concentrations of Puerto Rico bonds in the mutual funds.
