Puerto Rico has Muppets, too.

UBS brokers slamming house product down the throats of their uber-wealthy, tax-hating clients on the island territory of Puerto Rico.

Sure, why not…

From DealBook:

Puerto Rico, a commonwealth of the United States where residents typically pay no federal income tax, is regulated by the S.E.C. While other big banks do business in Puerto Rico, UBS is one of the few to have a large team of brokers on the island. The bank has five branches in Puerto Rico, with 132 brokers who manage money for the island’s elite, including local real estate magnates and wealthy foreigners. UBS often puts this money in mutual funds the bank itself manages. It can be a lucrative business. The broker and the bank get a commission on each sale, and the bank itself gets a fee for managing the fund.

The bank’s clients had piled into highly leveraged bond funds run by UBS and were encouraged by its brokers to borrow even more money to invest in those funds. In some cases, money was lent improperly, exacerbating current losses…

and…

Now, a number of UBS clients have been forced to liquidate hundreds of millions of dollars in holdings in these funds to meet margin calls. And the bank says it has begun an internal investigation into the lending practices of some of its top-producing brokers in the commonwealth.

The names may change, and so too do the locales and even language in which business is conducted. But Wall Street will always be Wall Street and even a broker living and working in paradise is going to test how far the envelope can be pushed.

Because that is what they are compensated to do.

Source:

UBS Brokers in Puerto Rico Create Headache for the Bank (DealBook)