WASHINGTON (Reuters) - UBS Financial Services Inc of Puerto Rico on Monday prevailed in a legal battle over a shareholder derivative lawsuit filed by pension plans in Puerto Rico, when the U.S. Supreme Court formally dismissed the case.
The high court had been due to rule on the case in the term starting in October and running until June 2014.
The justices instead dismissed the case because of a separate ruling on July 9 by a U.S. District Court judge in Puerto Rico. In that decision, the judge noted that the plaintiffs had sold their shares, meaning they no longer had standing to pursue the claims at issue in the Supreme Court case. The judge therefore dismissed the original lawsuit.
In the lawsuit, the investors, Union de Empleados de Muelles de Puerto Rico PRSSA Welfare Plan and Union de Empleados de Muelles de Puerto Rico AP Welfare Plan, sued on behalf of the funds. They claimed that the fund directors and the subsidiary of UBS AG UBSN.VX had, among other things, violated securities laws when purchasing approximately $757 million worth of bonds issued by the Employee Retirement System of the Government of Puerto Rico. The bonds were underwritten by another unit of UBS.
In the case the Supreme Court had agreed to hear, a federal judge initially dismissed the lawsuit. But in a January 4, 2013, ruling, the 1st U.S. Circuit Court of Appeals in Boston said the investors had shown that a pre-lawsuit demand to the directors would have been futile.
The Supreme Court had agreed to hear UBS’ appeal from that ruling.
UBS’s lawyer, Paul Lockwood, declined to comment. Jay Eisenhofer, who represents the shareholders, could not immediately be reached.
The Supreme Court’s public information office said the case was dismissed in accordance with court rules. It did not elaborate.
The case is UBS Financial Services Inc v. Union de Empleados de Muelles de Puerto Rico, U.S. Supreme Court, No. 12-1208.
Reporting by Lawrence Hurley; Editing by Howard Goller and David Gregorio