UBS Securities Case Thrown Out By Supreme Court

A consortium of Puerto Rican pension funds has seen their hopes for compensation over alleged mishandling of securities dashed.

(August 27, 2013) – Puerto Rican pension investors have lost the chance to take banking giant UBS to court over alleged manipulation of fund trading after the US’s Supreme Court threw out the case on August 26.

The investors, Union de Empleados de Muelles de Puerto Rico PRSSA Welfare Plan and Union de Empleados de Muelles de Puerto Rico AP Welfare Plan, claimed that UBS fund directors and the subsidiary of UBS AG had violated securities laws when purchasing approximately $757 million worth of bonds issued by the Employee Retirement System of the Government of Puerto Rico, according to Reuters.

The pension funds also alleged UBS had engaged in a scheme to manipulate trading for the investment funds in an attempt to drive up the price other investors would be willing to pay for them.

Supreme Court justices dismissed the case because of a separate ruling on July 9 by a US District Court judge, which found that as the plaintiffs had sold their shares, they no longer had the right to pursue the claims at issue.

The pension funds had appealed to the First Circuit court after the District Court case was dismissed, which led to a remand for further proceedings. They claimed that contacting the defendants before a trial would have been futile.

However, UBS then filed a petition for writ of certiorari—a legal term which dictates that inferior courts and authorities have only limited jurisdiction or powers and must be kept within their legal bounds—which resulted in the Supreme Court’s ultimate decision to dismiss the case.

Pension funds have had little success with securities cases in recent weeks: last week a New York judge dismissed a case brought by a large pension fund against ratings agency Moody’s over claims it misrepresented the creditworthiness of securities, and thereby harmed investments.

The judge dismissed several of the plaintiffs’ claims, including citing a US senator who had said ratings agencies should shoulder some of the blame for the financial crisis, saying investors had other opportunities to investigate securities before purchasing or selling them.

Related Content: Pension Loses Battle with Moody’s over Securities Misrepresentation and CalPERS Presses SEC for Better Investor Support  

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