Roman et al v. UBS Financial Services, Inc. of Puerto Rico et al

Filing 245

OPINION AND ORDER granted 234 Motion to Compel Arbitration and to Dismiss Plaintiffs' Individual Claims; case STAYED as to remaining defendants UBS Trust, P.R. Fixed Income Fund III, Inc. and P.R. Fixed Income Fund V, Inc. pending outcome of arbitration proceedings. Signed by Judge Carmen C. Cerezo on 8/21/2017. (mld)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
CARMELO ROMAN, RICARDO
ROMAN-RIVERA and
SDM HOLDINGS, INC., individually
and on behalf of all others similarly
situated
Plaintiffs
vs.
UBS FINANCIAL SERVICES, INC.
OF PUERTO RICO; UBS TRUST
COMPANY OF PUERTO RICO;
PUERTO RICO INVESTORS
TAX-FREE FUND IV, INC.; PUERTO
RICO FIXED INCOME FUND III, INC.;
PUERTO RICO FIXED INCOME
FUND V, INC.; PUERTO RICO
INVESTORS BOND FUND I, INC.;
PUERTO RICO AAA PORTFOLIO
BOND FUND, INC.; PUERTO
RICO AAA PORTFOLIO BOND
FUND II, INC.; MIGUEL A. FERRER;
CARLOS J. ORTIZ
Defendants

CIVIL 12-1663CCC

OPINION AND ORDER
Plaintiffs Carmelo Román, Ricardo Román-Rivera and SDM Holdings,
Inc., individually and on behalf of all others similarly situated, filed on August
13, 2012, this action (d.e. 1)1 typified as a ‘Class Action Complaint’ and
included 10 defendants: two corporate defendants, UBS Services Inc. of
Puerto Rico (“UBS PR”), a broker dealer and a subsidiary of UBS Financial

1

Plaintiffs filed a Consolidated Amended Complaint (d.e. 45) and a Second Consolidated
Amended Complaint (d.e. 60) which were ordered stricken by the Court on February 3, 2015 as
unnecessary and to avoid confusion since the action was “no longer consolidated
with 12-1849(CCC) as the latter was voluntarily dismissed.” (d.e. 138). Thus, plaintiffs’ claims are
governed by the original complaint filed on August 13, 2012.

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2

Services, Inc. and UBS Trust Company of Puerto Rico, (“UBS Trust”);
individual defendants, Miguel A. Ferrer (“Ferrer”) and Carlos J. Ortiz (“Ortiz”)
(collectively “Individual Defendants”), chairman/CEO and managing director
of UBS PR, and six closed-end management investment companies, identified
as defendants Puerto Rico Investors Tax-Free Fund IV, Inc., Puerto Rico Fixed
Income Fund III, Inc., Puerto Rico Fixed Income Fund V, Inc., Puerto Rico
Investors Bond Fund I, Inc,, Puerto Rico AAA Portfolio Bond, Inc., and Puerto
Rico Portfolio Bond II, Inc. (collectively “CEFs”).2

Plaintiffs Román and

Román-Rivera alleged at paragraphs 12 and 13 of the Complaint that they
purchased UBS’ Puerto Rico Fixed Income Fund III, Inc., Puerto Rico Investors
Tax-Free Fund IV, Inc., and Puerto Rico Investors Bond Fund I, Inc. at
artificially inflated prices and SDM Holdings, Inc. purchased UBS’ Puerto Rico
Fixed Income Fund V, Puerto Rico Fixed Income Fund III, Puerto Rico AAA
Portfolio Bond Fund, and Puerto Rico AAA Portfolio Bond II also at artificially
inflated prices. The claims were brought under the Securities Exchange Act
of 1934, §§ 10(b) and 20(a) and Rule 10(b)-5. All of the allegations of their
Complaint are tied to a scheme to defraud perpetrated by the corporate and
the individual defendants relating to the marketing and sale of closed-end
funds to plaintiffs and other investors similarly situated.

2

Partial Judgment was entered dismissing plaintiffs' claims against defendants Puerto Rico
Investors Tax Free Fund IV, Inc. and the Puerto Rico Investors Bond Fund I on August 28, 2013
and against defendants AAA Portfolio Bond Fund, Inc. and Puerto Rico AAA Portfolio Bond Fund
II, Inc on August 21, 2017. Accordingly, the remaining CEFs in the action are Puerto Rico Fixed
Income Fund III, Inc. and Puerto Rico Fixed Income Fund V, Inc.

CIVIL 12-1663CCC

3

The Court denied on September 30, 2016 plaintiffs’ Motion to Certify
Class and Appoint Class Counsel. (d.e. 229). A Statement of Reasons
followed at docket entry 230 in which the Court made a detailed legal analysis
in support of its September 30, 2016 Order adopting U.S. Magistrate-Judge
McGiverin’s Report and Recommendation and denying class certification.
Plaintiffs sought leave to appeal the denial of class certification. On March 7,
2017, the Court of Appeals for the First Circuit entered Judgment denying the
Rule 23(f) petition. (d.e. 239).
Before the Court is defendants UBS PR, Ortiz and Ferrer’s Motion to
Compel Arbitration and to Dismiss Plaintiffs’ Individual Claims (d.e. 234) filed
on February 13, 2017 and opposed by plaintiffs on February 27, 2017
(d.e. 235). Plaintiffs’ initial opposition was based on their then-pending appeal
from the Court’s denial of class certification, and argued that compelling
arbitration before the Court of Appeals ruled on the appeal would be
premature. A second opposition filed by plaintiffs on April 17, 2017, after the
Court of Appeals denied their request for leave to appeal the denial of class
certification, consists of only one argument: defendants’ Motion to Compel
Arbitration should be denied “on the grounds that this action is properly
maintained as a class action.”

Thus, plaintiffs’ opposition is in fact a

reconsideration of the September 30, 2016 Order denying plaintiffs’ Motion to
Certify Class and Appoint Class Counsel.

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4
DISCUSSION

I.

MOTION TO COMPEL ARBITRATION OF CLAIMS AGAINST UBS PR,
ORTIZ AND FERRER
Defendants urge that plaintiffs are bound by the pre-dispute arbitration

provision (“Arbitration provision”) in UBS’s Client Relationship Agreement
(“Relationship Agreement”), which each acknowledged at the time their
accounts with UBS PR were opened (see d.e. 234, Exhibits A, B and C).
The Arbitration provision of the Relationship Agreement states, in part:
You agree . . . that any controversy, claim or issue in any
controversy which may arise between you and UBS Financial
Services Inc. or you and UBS Financial Services Incorporated
of Puerto Rico, that occurred prior, on or subsequent to the
execution of this Agreement, including but not limited to, any
controversy, claim or issue in any controversy concerning any
account(s), transaction, dispute or the construction,
performance or breach of this Agreement or any other
agreement (whether entered into prior, on or subsequent to
the date hereof) shall be determined by arbitration.
(d.e. 234, Exhibit D, pages 7-8) (bold in original).
The Relationship Agreement also includes a clause that provides:
“All parties to this Agreement are giving up the right to sue each
other in court, including the right to a trial by jury, except as
provided by the rules of the arbitration forum in which a claim is
filed.”
(d.e. 234, Exhibit D, page 7).
Under the Federal Arbitration Act (“FAA”), “[a] written provision in [] a
contract evidencing a transaction involving commerce to settle by arbitration
a controversy thereafter arising out of such contract or transaction, or the
refusal to perform the whole or any part thereof, or an agreement in writing to
submit to arbitration an existing controversy arising out of such a contract,

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5

transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any contract.”
9 U.S.C. § 2. The FAA reflects a strong federal policy favoring arbitration.
HIM Portland, LLC v. DeVito Builders, Inc., 317 F.3d 41, 43 (1st Cir. 2003). “A
party seeking to compel arbitration under the FAA must demonstrate that a
valid agreement to arbitrate exists, that the movant is entitled to invoke the
arbitration clause, that the other party is bound by that clause, and that the
claim asserted comes within the clause's scope.” Dialysis Access Ctr., LLC v.
RMS Lifeline, Inc., 638 F.3d 367, 375 (1st Cir. 2011) (internal citations
omitted).
Plaintiffs’ position is that because they understand the case should
proceed as a class action, the parties controversies are not subject to
arbitration. It is true that, if this case were a class action, plaintiffs’ client
agreements with UBS PR would bar arbitration. The Arbitration provision
states that:
No person shall . . . seek to enforce any pre-dispute arbitration
Agreement against any person who has initiated in court a putative
class action; or who is a member of a putative class who has not
opted out of the class with respect to any claims encompassed by
the putative class action until: (i) the class certification is denied;
or (ii) the class is decertified; or (iii) the customer is excluded from
the class by the court."
(d.e. 234, Exhibit D, pages 7-8). Nevertheless, on September 30, 2016 the
Court denied plaintiffs’ request for class certification (d.e. 229), and
subsequently the First Circuit denied their Fed. R. Civ. P. 23(f) Petition. In
denying class certification, we observed:

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6

Throughout their original class action complaint, the one that
governs proceedings pursuant to the February 3, 2015 Order, and
also in the Second Consolidated Amended Complaint, submitted
by way of footnote number 3 in their class certification motion
(d.e. 168-1, p. 7, n. 3), plaintiffs have repeated a particular pattern
of conduct incurred by UBSPR and UBSFS to defraud them as
investors by manipulative tactics. In addition to the acts listed
above, taken from paragraphs 3, 4 and 5 which mirror each other
in both complaints, the following affirmative fraudulent actions are
found in both pleadings:
(1) inventory reduction: aware that investor demand was
significantly declining and/or insufficient to support the volume of
inventory (allegation 5 of original complaint and 6 of SCAC) to
avoid or offset potential losses, UBSPR’s parent company in the
spring of 2009 ordered it to substantially reduce its inventory of
CEF shares by launching a plan known as “Objective Soft Landing”
whereby UBSPR routinely offered and sold its CEF shares at
prices that undercut pending customer sell orders (allegation 6 of
the original complaint and 7 of the SCAC) resulting in the sale by
UBSPR, between March and September 2009, of its inventory to
investors at the expense of its supposed efforts to sell its clients’
holdings (paragraph 6 of the original complaint and 7 of the
SCAC); (2) market manipulation: as part of their scheme,
defendants concealed how they were setting secondary market
prices and artificially manipulated demand to create the
appearance of liquidity of the market while simultaneously
withdrawing market support, selling to the detriment of their clients
who were also attempting to sell. Allegation 6 of the Complaint and
8 of the SCAC.
The fraud, as concretely charged in the allegations of both
complaints, developed in the manner described above, whether as
set forth in the original or in the amended complaint. The fraud
consisted in manipulating the inventory, manipulating demand,
controlling the secondary market, competing against their own
clients, and deliberately reducing CEF inventory while touting the
CEFs as safe. These manipulations, misrepresentations and
misinformation were aimed at creating the false illusion of a safe
market, all of which eventually collapsed. The fact that plaintiffs
were not made privy to the misrepresentation and falsity of
defendants’ actions, while the scheme was ongoing, begs the
question for the whole fraudulent scheme was built on a false
appearance. This was not the type of situation where defendants
failed to disclose information or material facts which they had a
duty to disclose to their clients but, rather, it constituted an intricate
scheme by a brokerage firm which preyed on investors by

CIVIL 12-1663CCC

7

providing false information for an extended period purportedly
leading them to make investments with the eventual outcome of
their economic downfall. This conclusion is based on the
allegations of named plaintiffs themselves in both the original and
amended complaints and their exhibits, and on the report of their
own expert Edward S. O’Neal. Plaintiffs cannot have it both ways.
They cannot base their theory of liability on the affirmative
fraudulent manipulations and actions perpetrated by defendants
and simultaneously characterize them as simple “omissions.”
Statement of Reasons (d.e. 230), pp. 4-6.
We further held:
The R&R sets forth the following basic findings of fact relevant to
plaintiffs’ request for class certification under Fed. R. Civ. P.
23(b)(3), highlighting that Rule 23(b)(3) has two additional
prerequisites not included in Fed. R. Civ. P. 23(a): “that [1] the
questions of law or fact common to class members predominate
over any questions affecting only individual members, and [2] that
a class action is superior to other available methods for fairly and
efficiently adjudicating the controversy.” R&R, at p. 6.
(1) The Funds were not traded on a public exchange and did not
trade on an efficient market. See Compl. ¶ 1; Docket Nos. 73
at 22 n. 8; 168-1 at 11; 185-7 at 58.
(2) UBS-PR sold the Funds through approximately 145 Financial
Advisors (“FAs”), who functioned as brokers for 23 different Funds.
Docket No. 185-5 at 191, 272–73.
(3) The FAs’ discussions with customers were individualized to
meet the specific needs of each customer, and those discussions
were interactive and varied based on each customer’s situation,
needs, objectives, and questions asked. Docket No. 185-5
at 272–73.
(4)This being the case, plaintiffs acknowledged that “most, if not
all, of investors’ information regarding the [Funds] came from their
FAs.” Docket No. 168-1 at 13.
(5) Plaintiffs’ expert, Dr. Edward S. O’Neal, testified that whether
“an individual investor decided to purchase or sell a [F]und could
depend” on what the FA told the investor. Docket No. 185-7 at 206.
(6) Testimony from the plaintiffs representing the putative class
confirmed that the information each of them had available when
purchasing the Funds varied.

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8

R&R, p. 3.
These findings are followed by the Magistrate-Judge’s legal
analysis. U.S. Magistrate-Judge McGiverin’s analysis is essentially
based on the reliance element of a securities fraud action brought
under section 10(b) of the Securities Exchange Act and Rule 10b-5
promulgated thereunder. The element of reliance is widely
discussed in Erica P. John Fund, Inc. v. Halliburton Co., 131 S.Ct.
2179, 2185 (2011) (Halliburton I) and Halliburton v. Erica P. John
Fund, Inc., 134 S.Ct. 2398 (2014) (Halliburton II). Although
Halliburton I and II are securities fraud class actions seeking to
recover from defendants on a “fraud-on-the-market theory”, not
plaintiffs’ theory in this case, both cases establish that whether
common questions of law or fact predominate in a securities fraud
action turns on the element of reliance. See Halliburton II, p. 2416.
The fraud-on-the-market presumption of reliance was discarded in
the analysis of our case since the U.S. Magistrate-Judge observed
that: “Although the complaint alleged the fraud-on-the-market
doctrine applied here (referring to In Re Polimedica Corp.), Compl,
paragraph 92, plaintiffs’ expert conceded the market for the Funds
was not efficient and plaintiffs now concede that doctrine does not
apply in this case. Docket Nos. 168-1, at 11; 185-7 at 58.” R&R,
p. 8. The Magistrate-Judge also found inapplicable the “Affiliated
Ute presumption of reliance” which arises in circumstances
primarily involving a failure to disclose. Affiliated Ute Citizens of the
State of Utah et. al. v. United States et. al., 406 U.S. 128, 92 S.Ct.
1456 (1972). Affiliated Ute held that the Bank and its two
employees who failed to disclose to plaintiffs, holders of Ute
Distribution Company stocks, material facts that reasonably could
have been expected to influence the plaintiffs’ decisions to sell,
such as that their shares were selling for a higher price, justified a
presumption of reliance. The defendants in Affiliated Ute had an
obligation to disclose material facts that plaintiffs, as investors,
could have considered important in their decision to sell their stock.
I McLaughin on Class Actions, pp. 1304-05, explains the reach and
application of the Affiliated Ute presumption of reliance, stating:
The Supreme Court thus mitigated the difficulty of proving reliance
on an alleged non-disclosure in the face of a duty to disclose by
holding that for a Rule 10b-5 claim “involving primarily a failure to
disclose,” rather than misrepresentations, the reliance element
may be satisfied with allegations “that the facts withheld [are]
material.”
Most courts enforce clear-cut limitations on the Affiliated Ute
presumption of reliance– it applies only where there is no
affirmative statement alleged to have been misleading. Of course,

CIVIL 12-1663CCC

9

“[a]ll misrepresentations are also non-disclosures, at least to the
extent that there is a failure to disclose which facts in the
representation are not true.” Courts have consistently held,
however, that the Affiliated Ute presumption of reliance does not
arise where securities fraud plaintiffs challenge an affirmative
statement, even if the affirmative statements are alleged to be
misleading because additional material information was omitted.
This is precisely what the U.S. Magistrate-Judge concluded in our
case. At page 13 of the R&R, U.S. Magistrate-Judge McGiverin
states the reasons underlying his primary determination
that“plaintiffs cannot rely on the Affiliated Ute presumption of
reliance:”
Although plaintiffs claim they are entitled to the Affiliated Ute
presumption because the defendants concealed the manipulative
conduct, courts have held the presumption inapplicable in such
circumstances because any “fraudulent scheme requires some
degree of concealment, both of the truth and of the scheme itself.”
Joseph, 223 F.3d at 1163; accord Desai, 573 F.3d at 941. And
though plaintiffs contend their complaint primarily alleged the
nondisclosure of the underlying assets of the Funds, that
contention is belied by the well-pleaded allegations in the
complaint. Indeed, the complaint makes only one cursory
reference to the Funds’ underlying assets––“municipal
bonds”––and does not refer to the risky pension obligation bonds.
See Compl. ¶ 2. After reviewing the complaint, I find the
allegations therein primarily allege affirmative misrepresentations
and market manipulation. Accordingly, plaintiffs cannot rely on the
Affiliated Ute presumption of reliance. See, e.g., Desai, 573 F.3d
at 941 (“manipulative conduct has always been distinct from
actionable omissions”).
The corollary to this fundamental determination is immediately
thereafter explained by the U.S. Magistrate-Judge in the following
observation: “Because the Affiliated Ute presumption and the
fraud-on-the-market presumptions do not apply in this case,
individual issues of reliance will overwhelm the common issues
[and t]he court should deny class certification.” R&R, at pp. 13-14.
The individualized proof of reliance as to each putative class
member would include issues touched upon by the
U.S. Magistrate-Judge, such as the individual investors’ knowledge
of and experience in the market, needs and advise he/she received
relevant to an investment. Making reference to the deposition
testimonies of Doel García (d.e. 185-5, pp. 191, 272-73) and
Edward S. O’Neal (d.e. 185-7, p. 206), he made the following
factual determinations: (1) the 145 financial advisors (FAs)

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10

functioned as brokers in the sale of the Funds, (2) the discussions
that FAs had with customers were interactive and varied based on
each customer’s situations, needs, objectives and questions
asked, (3) plaintiffs acknowledged that “most, if not all of investors’
information regarding the Funds, came from their Fas, (4) plaintiffs’
expert testified that whether “an individual investor decided to
purchase or sell a Fund could depend” on what the FAs told the
investors, (5) the evidence indicates that the FAs were not required
to make uniform representations to investors, and (6) the
information provided depended on the investor’s portfolio and the
dialogue between the FA and the investor, as confirmed by the
deposition testimony of the named class plaintiffs.
The following cases cited by the Magistrate-Judge, all of which are
securities fraud actions, fully support his primary determination on
the inapplicability to this case of the Affiliated Ute presumption of
reliance.
Any fraudulent scheme requires some degree of concealment,
both of the truth and of the scheme itself. We cannot allow the
mere fact of this concealment to transform the alleged
malfeasance into an omission rather than an affirmative act. To do
otherwise would permit the Affiliated Ute presumption to swallow
the reliance requirement almost completely. Moreover, it would fail
to serve the Affiliated Ute presumption’s purpose since this is not
a case where reliance would be difficult to prove because it was
based on a negative. We therefore hold the Affiliated Ute
presumption of reliance inapplicable here. See Abell v. Potomac
Ins. Co., 858 F.2d 1104, 1119 (5th Cir. 1988) (applying the
presumption in non-disclosure cases, but not in falsehood or
distortion cases), judgment vacated on other grounds,
492 U.S. 914, 109 S.Ct. 3236, 106 L.Ed. 2d 584 (1989).
Joseph v. Wiles, 223 F.3d 1155, 1163 (10th Cir. 2000).
Omissions are generally actionable under Rule 10b-5(b). As we
explained above, they stem from the failure to disclose accurate
information relating to the value of a security where one has a duty
to disclose it.
. . .
Manipulative conduct, by contrast, is actionable under Rule
10b-5(a) or (c) and includes activities designed to affect the price
of a security artificially by simulating market activity that does not
reflect genuine investor demand. See Santa Fe,
430 U.S. at 476-77, 97 S.Ct. 1292; Ernst and Ernst v. Hochfelder,
425 U.S. 185, 199, 96 S.Ct. 1375, 47 L.Ed. 2d 668 (1976)

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(“[Manipulation] connotes intentional or willful conduct designed to
deceive or defraud investors by controlling or artificially affecting
the price of securities.”) In order to succeed, manipulative schemes
must usually remain undisclosed to the general public. See Santa
Fe, 430 U.S. at 477, 97 S.Ct. 1292. If such nondisclosure of a
defendant’s fraud was an actionable omission, then every
manipulative conduct case would become an omissions case. If
that were so, then all of the Supreme Court’s discussion of what
constitutes manipulative activity would be redundant. We decline
to read the Supreme Court’s case law on manipulative conduct as
little more than an entertaining, but completely superfluous,
intellectual exercise. See Stoneridge, 128 S.Ct. at 769, (listing the
three types of section 10(b) actions); Cent. Bank, 511 U.S. at 177,
114 S.Ct. 1439 (same).
Desai v. Deutsche Bank Securities LTD, 573 F.3d 931, 940-41
(9th Cir. 2009).
Statement of Reasons (d.e. 230), pp. 6-11.
Defendants have met their burden by demonstrating that a valid
agreement exists, that they are entitled to invoke the arbitration clause, that
plaintiffs are bound by the clause and that the claim asserted comes within the
clause's scope.

See Grand Wireless, Inc. v. Verizon Wireless, Inc.,

748 F.3d 1, 8 (1st Cir. 2014) (“[i]n the absence of any express provision
excluding a particular grievance from arbitration, we think only the most forceful
evidence of a purpose to exclude the claim from arbitration can prevail.”)
Accordingly, we will enforce the Arbitration provision.
The issue then turns on the proper disposition of the case. Section 3 of
the FAA states that where the issues before a court are arbitrable, the Court
shall “stay the trial of the action until such arbitration has been had in
accordance with the terms of the agreement.” 9 U.S.C. § 3. Nevertheless, the
First Circuit has held that a court “may court may dismiss, rather than stay, a

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12

case when all of the issues before the court are arbitrable.” Bercovitch v.
Baldwin Sch., Inc., 133 F.3d 141, 156 (1st Cir. 1998).
The Arbitration provision in the instant case is broadly worded: “You
agree . . . that any controversy, claim or issue in any controversy which may
arise between you and UBS Financial Services Inc. or you and UBS Financial
Services Incorporated of Puerto Rico, that occurred prior, on or subsequent to
the execution of this Agreement, including but not limited to, any controversy,
claim or issue in any controversy concerning any account(s), transaction,
dispute or the construction, performance or breach of this Agreement or
any other agreement (whether entered into prior, on or subsequent to the date
hereof) shall be determined by arbitration.” (d.e. 234, Exhibit D, pages 7-8)
(emphasis ours).

Plaintiffs’ claims

as

detailed

in the complaint

against UBS PR, Ortiz and Ferrer3 fall within the broad scope of this provision.
Therefore, the claims against UBS PR, Ortiz and Ferrer are DISMISSED,
without prejudice.
II.

MOTION TO STAY CLAIMS AGAINST REMAINING DEFENDANTS
Defendants also argue that “[b]ecause plaintiffs’ remaining claims against

UBS Trust and the [CEFs] are co-extensive with the arbitrable claims against
the other defendants, the Court should stay the Action as to the remaining
defendants pending the outcome of the arbitration proceedings.” (d.e. 234,
page 12).
3

In instances “[w]here a case involves both arbitrable and

The Arbitration provision is enforceable against plaintiffs’ claims against defendants Ortiz
and Ferrer since they were acting as agents of UBS PR. See Grand Wireless, 748 F.3d
at 13 (finding that an agent is entitled to the protection of her principal's arbitration clause when the
claims against her are based on her conduct as an agent).

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13

non-arbitrable claims, whether the non-arbitrable claims should be stayed
pending resolution of the arbitrable claims is generally discretionary with the
court.” Baggesen v. Am. Skandia Life Assurance Corp., 235 F. Supp. 2d 30,
33 (D. Mass. 2002).
Plaintiffs’ arbitrable claims are inextricably entwined with the
non-arbitrable claims and the outcome of the non-arbitrable claims will depend
on the arbitrators decisions. Accordingly, the claims against UBS Trust and the
remaining CEFs are hereby STAYED pending the outcome of the arbitration.
CONCLUSION
For the reasons stated, defendants’ Motion to Compel Arbitration
(d.e. 234) is GRANTED. The Court ORDERS plaintiffs Carmelo Román,
Ricardo Román-Rivera and SDM Holdings, Inc. and defendants UBS PR, Ortiz
and Ferrer to submit to arbitration and plaintiffs’ claims against
defendants UBS PR, Ortiz and Ferrer are DISMISSED, without prejudice. The
case is STAYED as to the remaining defendants UBS Trust and the remaining
CEFs in the action, Puerto Rico Fixed Income Fund III, Inc. and Puerto Rico
Fixed Income Fund V, Inc., pending the outcome of the arbitration proceedings.
Partial judgment to be entered by separate order.
SO ORDERED.
At San Juan, Puerto Rico, on August 21, 2017.

S/CARMEN CONSUELO CEREZO
United States District Judge