Multi-million Dollar Award for Fraud Whistleblower in UBS Case
The Securities and Exchange Commission (SEC) gave a multi-million dollar award last Three Kings Day to the financial advisor of the UBS Guaynabo branch office that gave investigators information on fraudulent tactics employed to sell closed-end funds to Puerto Rico investors.
Gustavo A. del Valle's whistleblowing resulted in complaints against former UBS head executives, Miguel A. Ferrer and Carlos J. Ortiz, as well as against UBS. The complaint against the executives was dismissed and UBS closed theirs with a $26.6 million payment.
The SEC's determination notified on Three Kings Day was that Del Valle will receive a $ 5.5 million award, or 22% of the amount paid by the defendants as part of the case that, according to UBS market disclosures, is still pending a separate criminal investigation.
In the award notice that NotiCel obtained, the SEC notes that the former advisor offered information while still under employment at UBS and that 'thereafter (he) provided critical information that helped end an on-going fraud that preyed predominantly on a more vulnerable investment community'. The facts are that UBS created a series of investment funds marketed to local investors and that the funds had a high level of concentration in Government of Puerto Rico bonds.
Del Valle had about 40 clients and less than half had invested in the funds that UBS marketed to investors on the Island and which served as the vehicle for the fraud. In addition to this reward, Del Valle had obtained about $650,000 in payment awards against UBS for his dismissal and for alleged discriminatory conduct by the investment bank.
According to Jane Norberg, Chief of the SEC's Office of the Whistleblower, enforcement actions from whistleblower tips have resulted in more than $904 million in financial remedies. The SEC's whistleblower program has now awarded approximately $142 million to 38 whistleblowers since issuing its first award in 2012.
Whistleblowers may be eligible for an award when they voluntarily provide the SEC with unique and useful information that leads to a successful enforcement action. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million, said the SEC in a statement.
Informants are not identified but, in Del Valle's case, his role was disclosed in the complaints and in his participation in the administrative processes that sprang from the investigation.
Although UBS closed the SEC's administrative complaint with the $26.6 million settlement, they still face dozens of arbitration cases filed by individual investors that have obtained millions of dollar in awards. Some cases have been dismissed and also, over the holidays, UBS filed an action before Puerto Rico District Court to vacate one of the most talked about arbitration awards, that of attorney Rafael Vizcarrondo, of Fiddler, González <><><><>& Rodríguez, and his wife who received some $18.5 million. This is the first award that UBS asks to vacate in federal court from these pool of cases./p
Following the original publication of this story, UBS issued a statement in which they stressed that 'the SEC judge specifically opined that she found no evidence of wrongdoing on the part of the individuals or the firm. We are also not aware of any ongoing investigation concerning the 2012 matters, criminal or otherwise.'br /