UBS Puerto Rico has been restructured into two separate divisions and its top management has been reshuffled as part of changes that include the exit of long-time chairman Miguel Ferrer, who will leave his post July 31, a high-ranking executive said Thursday.
“We thank Miguel for his many years of loyal service. I have worked closely with Miguel for four years and was able to appreciate first hand his dedication to UBS and to Puerto Rico,” said Bob Mulholland, head of UBS’s client advisor group.
“I hope that he will continue to pursue with the same vigor his visions for the island and for all Puerto Ricans and wish him nothing but the best,” he said in a letter sent to local company employees Thursday.
The position of chairman will be eliminated and effective immediately, Carlos Ubiñas will assume a new position as head of capital markets, responsible for asset management, investment banking, and interfacing with local regulators and local media, as needed.
He will remain chairman of the broker dealer, UBS Puerto Rico, while Carlos “Juany” Ortiz will assume a new position as head of wealth management, responsible for the wealth management branches, the consulting group and the administration area.
“Both Carlos and Juany will report to me. I have also asked Ricardo González, head of UBS International, to support Carlos and Juany in an advisory capacity during this transition period,” Mulholland said, about the changes effected to address “changing environment and market conditions, and to ensure we are best able to serve our clients well into the future.”
Ubiñas has been with UBS for 25 years, which coupled with his background in investment banking and his legal training, “make him ideally suited for his new role,” Mulholland said.
“In my discussions with Carlos about the future of UBS in Puerto Rico, we both agreed that he is the right leader for these critical and complex functions and that his full attention is necessary to achieve our goals in capital markets and across the firm. We expect that Carlos will continue to play a meaningful role with our clients and look forward to his future contributions to the overall business in Puerto Rico,” the executive added.
Meanwhile, Ortiz is expected to contribute his market insights and credit skills, as well as his trading and risk management expertise, which “give him the experience and fresh perspective necessary to move our wealth management business forward,” Mulholland said.
“Drawing on Carlos’ and Juany’s complementary strengths and experiences, the Puerto Rico business will be well-positioned to provide the full suite of holistic wealth management advice and services to our high net worth and ultra high net worth clients. Ricky’s understanding of the business and the Puerto Rico market will also be a great resource during the transition,” Mulholland said.
Changes draw reaction
The changes UBS Puerto Rico announced drew immediate reaction from a couple of law firms representing hundreds of customers suing the asset management firm for the sale of Puerto Rico bond funds, which has been the center of controversy for the past year.
“I think it’s a major shakeup and signals, in my opinion, that UBS is distancing itself from those at the center of the UBS bond fund controversy that has cost UBS customers hundreds of millions if not billions in losses,” said Attorney Jeffrey Sonn, of Miami-based Sonn & Erez PLC.
UBS and other investors suffered large losses through investments in closed-end funds whose sales by UBS are now the subject of a criminal investigation by the FBI. Packed with Puerto Rican government bonds that UBS had underwritten, the funds plunged in value at the end of last summer as concerns grew about the persistent weakness in Puerto Rico’s economy and its ability to repay its debt.
“We believe the recent FBI investigation is about whether UBS executives in Puerto Rico and in the U.S. [mainland] knew that proceeds from loans made to UBS customers in Puerto Rico were used to purchase more UBS proprietary bond funds, in violation of federal regulations and UBS’ own lending rules,” said Eliezer Aldarondo, of Aldarondo & Lopez-Bras in Guaynabo, co-counsel with Sonn & Erez.
“If so, the UBS officials may be subject to civil and criminal liability,” Sonn said.”The timing of Ferrer’s departure during the early stages of an FBI investigation and hundreds of FINRA arbitrations against UBS is certainly open to interpretation about the motives of UBS,”
“From my experience, I would not be surprised if UBS gave Miguel Ferrer a golden parachute along with a strong confidentiality agreement so UBS can insure that Ferrer will remain loyal to UBS during these civil and criminal cases,” added Sonn.
“‘We look forward to reading his termination agreement that we expect to get in discovery during the pending FINRA arbitrations,” said Erez.
The law firms represent more than 170 customers of UBS that experienced heavy losses in UBS proprietary bond funds.