MIAMI, July 29, 2008 (PRIME NEWSWIRE) -- The securities law firm of Dimond Kaplan & Rothstein, P.A. (DKR) (http://www.investmentfraud-lawyer.com) informs investors that UBS Financial Services, Inc. ("UBS") continues to deny that auction rate securities investors have suffered any damages. DKR has filed numerous FINRA securities arbitration claims against UBS and other Wall Street broker-dealers alleging fraudulent marketing and sales of now-illiquid auction rate securities ("ARS"). The crux of the claims is that UBS and other brokerage firms represented that auction rate securities were safe, liquid, cash-equivalent investments when in fact auction rate securities actually exposed investors to significant liquidity and principal risk.
In one such case filed by DKR on behalf of a Florida UBS customer, DKR's client was forced to take a margin loan from UBS when her student-loan auction rate securities became illiquid, using her ARS as collateral for the loan. But remarkably, within days of making the loan, UBS marked down the value of the client's ARS and issued a margin call because of the decrease in value of the securities serving as collateral for the loan. Indeed, UBS has marked down the value of the investor's student-loan ARS by nearly 50% and since has issued further margin calls. Yet despite having marked down the value of the customer's auction rate securities and having issued margin calls based on that decrease in value, UBS has filed papers in the arbitration case denying that DKR's client has suffered any damages. UBS also claims that it does not owe its client any fiduciary duty, despite the fact that Florida law clearly imposes such a duty on brokerage firms.
UBS also continues to deny any responsibility for its role in the harm caused to auction rate securities investors despite evidence that the Massachusetts Secretary of State and the New York Attorney General have uncovered that supports allegations that UBS engaged in fraud in the sale of auction rate securities. Specifically, internal UBS documents reflect that UBS not only fraudulently recommended and sold auction rate securities to investors, but also knew as early as the Fall of 2007 that the ARS market was at risk. The documents also reflect that because of UBS's concern about the auction rate securities market, from late 2007 through early 2008, UBS engaged in a campaign to decrease its own soon-to-be-illiquid ARS holdings by stepping up its efforts to sell its ARS holdings to UBS retail customers. All the while, UBS represented to its customers that auction rate securities were safe, liquid investments. During this same period, several senior UBS executives also unloaded their own ARS on the investing public. DKR expects that this newly uncovered evidence will strengthen the firm's arbitration claims against UBS, the first of which is scheduled to go to final hearing in October 2008.
Dimond Kaplan & Rothstein, P.A. is an AV-rated law firm that represents investors nationwide in stockbroker misconduct and investment fraud cases. They have represented investors against most major Wall Street brokerage firms in claims involving stocks, options, variable annuities, hedge funds, mutual funds, bonds, auction rate securities and collateralized mortgage obligations (CMOs). If you are a victim of investment fraud, please contact Jeffrey B. Kaplan, Esq. of Dimond Kaplan & Rothstein, P.A. at (888) 578-6255 or jkaplan@dkrpa.com for a free case evaluation. You also may visit Dimond Kaplan & Rothstein, P.A. on the web at www.dkrpa.com or www.investmentfraud-lawyer.com.
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