UBS Puerto Rico Bond Fund "Roach Motels," Sold To Own Clients, Start Imploding

UBS, despite the well-known problems Puerto Rico has been having for years, wasn't shy about loading up its clients up with these bonds... Many of those investors bought even more fund shares with money they borrowed through credit lines from another UBS unit, after several UBS brokers may have improperly advised them to do so, according to a $5.2 million settlement between UBS and Puerto Rico's financial regulator in 2014...

UBS sent out a letter to its clients on July 13, and at least one of those incensed recipients must have leaked a copy to Reuters. In this letter, UBS said that it "will also reduce to zero the collateral value assigned to all Puerto Rico closed-end funds shares."... UBS might liquidate the assets of clients who used these Puerto Rico bond funds as collateral for loans and might even take legal actions against them if they fail to produce additional collateral to replace the funds.