Attorneys for UBS AG and Bank of America Merrill Lynch are opposing an effort that seeks to stem the overflow of hundreds of complaints related to battered Puerto Rico bond funds by diverting cases to arbitration venues in the Southeastern United States.
In a confidential meeting Thursday between Finra officials and attorneys for claimants and respondents, attorneys for the two firms said that the cases should be heard in Puerto Rico, where most of the claimants reside, instead of locations such as Florida and Texas, according to sources present for the discussion.
The parties disagreed, however, as claimants argued that such a decision could cause delays for investors, most of whom are on the island.
How to expand the pool of arbitrators available to hear cases related to declines in the Puerto Rico municipal-bond market remains a point of contention, even as claimants' attorneys prepare to file hundreds of more cases.
Last month, Linda Feinberg, president of dispute resolution at the Financial Industry Regulatory Authority Inc., said that the regulator had temporarily stopped processing new claims as it sorted out how to handle some 200 cases that had already been filed.
There are just nine arbitrators in Puerto Rico, and panels for claims of at least $20,000 comprise three arbitrators.
Finra has sent a staff member to Puerto Rico to try and hire more arbitrators locally, spokeswoman Michelle Ong confirmed.
The self-regulator's guidelines state that the director of arbitration will “generally” select a hearing location closest to the investor's residence at the time of the dispute.
The location may be changed, however, at the discretion of the director or arbitration if the investor has requested a change.
Attorneys for the claimants have asked that investors be able to file complaints outside of Puerto Rico, in the Southeaste
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