When residents of Puerto Rico funneled their life savings into funds that were largely made up of the island's bonds, they were told their money would be safe.
They were told that they would receive interest payments that were higher than many comparable opportunities. They were told income would be tax exempt.
And when those investments began to evaporate four years ago, they were told not to sell, that the market would rebound, and they would recoup their losses — eventually.
This year, eventually became never after Puerto Rico triggered bankruptcy-like proceedings, and the island began restructuring its debt to seek protection from creditors — pushing the already depreciated bond prices within the funds lower. Then came Hurricane Maria, and those prices plummeted even further.
While the storm that decimated the island's infrastructure was unavoidable, the one that tore through the savings of its residents was entirely man-made.
"To have this type of carnage being born on this small of a population in this small of a geographic territory is something that we'll likely never see again," said attorney Jeffrey Erez, whose law firm Sonn and Erez has filed hundreds of securities cases on behalf of Puerto Rican investors. "You have the complete investing class on a very small island having lost 50 percent, 60 percent, 70 percent, 80 percent of their retirement savings within a few years."
A CNBC investigation found that UBS was not forthcoming about the extent of the risks of those bond funds from both its clients and brokers, even as the values of the funds plummeted. By the end of 2012, more than $10 billion in assets were invested in UBS' bond funds. That represented about 10 percent of the island's gross domestic product at the time. Today, those investments have been nearly wiped out.
About 2,000 pages of confidential documents obtained by CNBC reveal the inner workings and dialogue between executives at UBS Puerto Rico and those in Weehawken, New Jersey, leading up to and after the crash of the funds.
They show UBS executives sought to withhold stress-test results from their brokers and did not translate research reports and other fund documents to Spanish. They show that even though some of the most powerful brokers expressed multiple concerns about the bond funds early on, UBS management encouraged them to sell the funds anyway.
The documents also reveal that in 2012, more than a year before the eventual collapse of the funds, UBS executives in the Americas and Puerto Rico were not only aware of the funds' troubling features, they were having discussions about the devastating consequences if the firm didn't address these issues.