The UBS Willow Fund, ostensibly a distressed debt fund, was a closed-ended fund recommended and sold by UBS to its clients. This product utilized credit default swaps (“CDS”), which are essentially contracts whereby one party shifts the risk of a default onto the CDS seller in exchange for an agreed upon premium. These are highly speculative investments. Unfortunately for the Willow Fund, it invested in CDS involving European sovereign debt. This gamble by UBS did not pay off, and investors are now paying the price.
Last October, investors found out the Willow Fund, which was valued in 2006 at $500 million, was being liquidated. As reported by the New York Times, the Willow Fund suffered losses of almost 80 percent in the first three quarters of 2012, and as a result, drastically switched investment strategy away from distressed debt, and into highly speculative CDS.
Some UBS investors were unaware they held investments in such a speculative product, and now investors are out millions of dollars. Investment fraud may be found on a variety of grounds, including that these investments were unsuitable for certain investors. If you held UBS Willow Fund and believe you may have lost value in your investment due to securities fraud, please contact Block & Landsman to discuss how we may be able to assist you in recovering your assets.