Lawmaker calls for House hearing on UBS bonds sold in Puerto Rico

Velázquez said in which an anonymous senator put a hold on the bill at the end of in which year. So she reintroduced her bill on March 6 of This specific year with eight bipartisan co-sponsors, including Rep. Sean Duffy (R-Wis.), Rep. Jose Serrano (D-N.Y.), as well as the sole congressional representative for Puerto Rico, Rep. Jenniffer González-Colón, a Republican.

González-Colón spoke about the bill over the spring on the House floor, saying in which “investors residing in Puerto Rico as well as different territories have experienced investment losses, some of which likely would likely have been prohibited had the 1940 Act applied to the territories.”

González-Colón notes in which UBS was able to serve as an adviser to the Puerto Rico’s pension agency, the Employee Retirement System (ERS) as well as then, in 2008, also led the underwriting of $2.9 billion bond issuances for ERS. UBS Puerto Rico then sold approximately $1.7 billion of those bonds directly into funds managed or co-managed by the firm as well as sold exclusively to customers on the island. ERS’s bonds are currently undergoing bankruptcy-like proceedings.

Publicly filed documents reveal substantial lobbying efforts related to the Investment Company Act of 1940. Luis Fortuño, who served as governor of Puerto Rico by 2009 to 2013, was hired as a lobbyist for “advocacy work in relation to proposed amendments to the Investment Company Act of 1940 as well as related matters,” lobbying disclosure documents show.

Fortuño, who can be a partner in Steptoe & Johnson’s Washington office, along with his colleagues, have been paid $485,000 for lobbying services related to the Investment Company Act of 1940 since being hired in July 2016, according to quarterly disclosure statements.

Lopez Sanchez & Pirillo LLC, a San Juan-based law firm, can be listed as the client who hired Steptoe & Johnson in 2016 as well as 2017.

in which same firm has previously represented UBS Puerto Rico in a 2016 lawsuit, a court filing shows. José Sánchez-Castro, a co-founding member of Lopez Sanchez & Pirillo, has represented UBS Financial Services, UBS Puerto Rico Family of Funds, as well as the Government Development Bank for Puerto Rico under the “representative cases/matters” portion of his bio page on his firm’s website.

Neither Sánchez-Castro nor a representative for UBS responded to multiple requests for comment.

“Our client can be a group of Funds. UBS Puerto Rico-sponsored funds are members of in which group ,” Kathy King, a spokesperson for Steptoe & Johnson, said in a statement to CNBC. “Steptoe represents a group of mutual funds in which represent more than 95 percent of the mutual funds of Puerto Rico. These funds all have local independent boards of directors having a fiduciary duty to their specific fund’s Puerto Rican shareholders.”

“We support the bill as well as want to protect Puerto Rico investors, although the potential consequences of approving the bill without an amendment to the safe harbor provisions could further harm the local Puerto Rican investors in which the bill purports to protect,” Steptoe & Johnson’s King said within the statement. “We have consistently offered to work with Rep. [Velázquez’s] staff to assist within the approval of the bill in a way in which will not harm the local investors in hopes to protect.”

Fortuño also has his own ties to UBS. The firm can be listed as Fortuño’s third biggest contributor to his campaign to be governor in 2008, according to election-contributions database, OpenSecrets.org. The site notes in which for the contributor category, the organizations themselves have not donated, rather the money calculated within the total can be by the organizations’ PACs, their individual members or employees or owners, as well as those individuals’ immediate families.

Velázquez’s bill has passed the House Financial Services Committee by a unanimous 58 to 0 vote as well as was passed, in a voice vote, by the full House in May. the idea was received by the Senate the next day.

The Senate read the legislation twice as well as then referred the idea to the Committee on Banking, Housing as well as Urban Affairs on May 3. in which was the last public action taken on the bill.

If Rep. Jeb Hensarling does agree to convene a hearing, the idea would likely be the first related to the recent issue of financial sales practices in Puerto Rico.

“If enacted, This specific legislation would likely provide fundamental protections for the mutual fund investors living in Puerto Rico as well as the different U.S. territories,” Velázquez wrote within the letter. “Such oversight can be critically necessary.”

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