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Little Help For Investors From The Puerto Rico Supreme Court And Rumors

Yesterday, the Puerto Rico Supreme Court temporarily stopped the enforcement of the law signed by Gov. Alejandro Garcia Padilla on Christmas Eve with reformations to the teacher pension system. The Supreme Court blocked the reforms to the pension system that the government insists it needs to avoid a downgrade of Puerto Rico debt securities to junk status. Gov. Garcia Padillo stated “saving the teacher pension system and guaranteeing them sufficient pensions in line with the Island’s fiscal realities is an issue that demands a deep sense of responsibility, as does saving Puerto Rico’s credit rating,” a credit rating that is just one step away from junk status. Today the Supreme Court held a hearing on a lawsuit challenging a separate reform of the pension fund for the judicial system in Puerto Rico. You don’t have to think too hard as to what their decision will be in light of their ruling on teacher pension reform.

The Financial Times reported yesterday that creditors to Puerto Rico are meeting in New York with lawyers and debt restructuring specialists in anticipation that the Puerto Rican government will be imposing a moratorium on payments of over $110 billion in public sector debt and unfunded pension liabilities. As the fear of suspension on payment of the debt grows, the anticipated expense to service that debt also increases. This is becoming a self-fulfilling prophecy of doom to the Island. We are hearing from our clients that Puerto Rico stockbrokers have been contacting them and spreading a rumor that the Puerto Rico Government Development bonds are going to be restructured through a write-down of over 35% on the face value of the bonds.

All of these Puerto Rico government and Court actions and rumors will undoubtedly accelerate the credit rating agencies timetable for downgrading Puerto Rico debt securities. This bad news further depresses the net asset value of the UBS Puerto Rico bond funds. The most recent NAVs, published January 8, 2014, put the value of the funds as follows:

The fund NAVs have steadily declined since we’ve tracked them over the last several months. We believe that the financial advisors at UBS Puerto Rico, Santander Securities, Popular Securities, Merrill Lynch and Oriental who have recommended additional purchases of Puerto Rico debt simply have no reasonable basis for their recommendations.

Have you suffered losses in a Puerto Rico closed-end bond fund investment? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. We have associated with an attorney in San Juan, Puerto Rico, namely Lcdo. Julio Cayere-Quidgley, who will meet with you and discuss your case at no charge. Mr. Pearce and Mr. Cayere are accepting clients with valid claims against UBS Puerto Rico, Santander Securities, Popular Securities, Merrill Lynch and Oriental for misrepresentations, overconcentration and/or unsuitable recommendations of its bond funds.

The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over , Attorney Robert Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. Attorney Adam Kara-Lopez habla español. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.