Puerto Rico Pension Fund Joins Suit Against UBS Over Muni Bonds
- System in U.S. territory could go broke as soon as 2018
- UBS has already paid millions in claims for bondholders
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Puerto Rico’s retirement system, on the brink of insolvency, is joining a lawsuit against UBS Group AG, faulting the company for poor investment returns on $3 billion it borrowed in an effort to bolster the pension.
UBS underwrote bonds sold by the employees and judiciary retirement systems in 2008 and served as the investment consultant. The income from reinvesting the proceeds was supposed to far exceed the cost of borrowing, delivering a profit. Puerto Rico said in a statement that much of the proceeds went instead into low-yielding accounts that produced “negative investment income since day one."