Approximately four million shareholders of Puerto Rico Residents Tax Free Fund Inc. (PRITF I) have voted in favor of a proposal by Ocean Capital to terminate the advisory and management contracts of UBS Financial Services and Popular Asset Management on closed-end mutual funds on the island.
The news was announced after an Annual Meeting where shareholders also elected Ocean Capital’s candidate, Ian McCarthy, to the fund’s Board of Directors, with overwhelming support. Ocean Capital, which owns 13% of the shares of PRITF I, has been pushing for new leadership in the nine closed mutual funds in Puerto Rico since 2021.
“Shareholders have spoken once again; New leaders are needed to improve fund performance and governance. Despite this clear and persistent mandate for change, UBS, Popular Asset Management, and entrenched fund managers refuse to step aside,” said William Heath Hawk, founder of Ocean Capital.
The investment firm has been involved in a legal battle with PRITF I, spending more than $5 million on outside advisers to fight against Ocean Capital’s proposed changes. It has also faced challenges in restructuring the governance of other funds designed by UBS.
Ocean Capital insists that the current directors have remained in their positions for over six and a half years and are not serving the best interests of shareholders. The firm is calling for the resignation of the current directors and the termination of management agreements with UBS and Popular Asset Management.
For about a decade, clients of these closed-end mutual funds in Puerto Rico have been affected by the dispute with UBS and the government’s bankruptcy. The independence of the current directors has been questioned, with allegations that they were appointed by the investment house, a claim that UBS has denied.