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Investors Sue to Recover Losses Stemming from UBS Willow Fund

By George Miller of Shustak Reynolds & Partners, P.C. posted on Friday, April 5, 2013.

Investors in UBS Willow Fund, L.L.C. (the “Willow Fund”), which was sponsored and sold by UBS Financial Services, Inc., have begun filing claims to recover significant investment losses allegedly caused by the fund manager’s decision to shift his investment strategy and invest in complex derivative trades. According to public sources, the fund, which historically focused on corporate bonds and other traditional debt interests, held assets approaching the $500 million mark in 2006. But after its long time manager began channeling fund assets into derivative investments including credit default swaps in 2007, the fund began a series of precipitous declines which ultimately led to its total liquidation in October 2012. According to a recent New York Times article, the fund lost 89% of its value in 2012 alone.

An investor who recently filed suit against UBS claims the fund’s disclosures did not sufficiently warn investors of the risks of investing in credit default swaps or the shift in the fund manager’s strategy. UBS denies the claim, calling the Willow Fund a “specialized, speculative investment sold only to sophisticated and experienced investors who represented that they understood the fund’s substantial risks.” The remaining assets of the fund will be distributed to investors this summer.

If you have been the victim of misrepresentations or fraud in connection with the purchase of securities or been sold an unsuitable mutual fund or other investment, you may contact our firm’s managing partner, Erwin Shustak, at (619) 696-9500 or [email protected] to discuss your potential claim.

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