Carisalagen Investment has persuaded a federal court to compel testimony from one of UBS’s ex advisors, David Jose Lugo.
Notably, Lugo was previously named in a sentencing memorandum filed by Jose Gabriel Ramirez, Jr., the only ex-UBS advisor criminally convicted in a case over Puerto Rico bonds.
The development signals another likely legal headache for the UBS, which, since the bottom fell out of the Puerto Rican bond market in 2013, has faced persistent related challenges, including hundreds of complaints by investors, as well as federal investigations.
In late October, the federal court in Puerto Rico ruled in favor of Carisalagen’s urgent request and ordered Lugo, whom the investment firm said has acted as its FA, to appear at a Finra hearing scheduled for this week.
Carisalagen is a Puerto Rico-based investment firm with a complaint against UBS. When Carisalagen filed its urgent request with the federal court, Carisalagen did not provide any details about its complaint against UBS pending at Finra, so those are unknown.
A UBS spokesperson declined to comment.
Lugo has 201 disclosures of customer disputes on his BrokerCheck record. He stopped working at UBS in 2015 and has 16 years of experience at three firms. Many of his current customer disputes are still pending, according to BrokerCheck, which also lists him as no longer registered as a broker-dealer representative.
Lugo’s name surfaced during the criminal case of Ramirez, who entered a guilty plea to bank fraud charges based on allegations that he pocketed $1 million in commissions, becoming this year the first person to serve jail time for charges based on UBS proprietary closed end bond funds, according to a CNBC report.
In his sentencing memorandum, Ramirez identified Lugo among others as someone who was either involved in, had knowledge of, or encouraged transactions in the scheme that was the basis of his conviction, according to the CNBC report.
A lawyer for Lugo told CNBC: “Mr Lugo did not engage in the activities for which Mr. Ramirez was charged, and to which Mr. Ramirez pled guilty. Nor was Mr. Lugo ever even charged with conducting such activity."
Ramirez stopped working at UBS in 2015 and Finra has permanently barred him from working in the industry, according to BrokerCheck.org.
In March, after Ramirez filed his sentencing memorandum naming Lugo, a UBS spokesman told CNBC: “In its sentencing papers, the DOJ described Mr. Ramirez’s offense as ‘brazen’, found that he took various steps to ‘circumvent’ UBS controls and to ‘obscure’ from UBS what he was doing, and found that Mr. Ramirez ‘took advantage of all parties involved.’ In light of these findings, Mr. Ramirez’s last-ditch efforts to blame his victims for his own criminal conduct should be seen for what it is: an attempt to escape responsibility for his own wrongdoing.”