In April 2011, two years before their prices sank, a slew of bond funds that were being sold by UBS's Puerto Rico arm appeared to its brokers to be such risky investments that they balked at promoting them to their clients.

Their misgivings became so great that when a group of brokers was asked by the firm why they weren't selling more of the funds' shares they came up with a list of 22 reasons, according to people familiar with the matter. The concerns, which the brokers said were based on their own views and feedback from clients, included allegations the funds suffered from low liquidity, excessive leverage, oversupply and instability. They were wary, in part, because many of the funds were loaded up with debt of the Puerto Rican government and related entities that was underwritten by UBS, the people said.

Their views were unacceptable to Miguel Ferrer, then the chairman of UBS Financial Services Inc of Puerto Rico, a unit of UBS AG. On June 2 of that year he told a meeting of the firm's brokers, held at its offices in the Golden Mile banking district of San Juan, they had to change their mindset or leave, according to an audio recording reviewed by Reuters.

"You need to focus again on the attractive benefits of our funds and stop this nonsense that there are no products available - because if there are no products, go home, get a new job!" Ferrer can be heard telling them in Spanish in the recording, which was made by one of those attending.

Ferrer stressed that the brokers had almost $1 billion in cash in their clients' accounts that was not generating commissions. He said the team's production had dropped "40-something-percent" (a figure now disputed by UBS that says it was closer to 10 percent), that "overall we are doing quite badly" and it was "bullshit" for brokers to claim there weren't products to sell.

The recording could help to bolster arbitration claims filed with the Financial Industry Regulatory Authority in the U.S. by hundreds of investors seeking more than $900 million in damages from UBS, said Andrew Stoltmann, a Chicago-based lawyer representing some of the investors. The claims are based on allegations UBS Puerto Rico pitched the funds' high yields and tax benefits to clients, but did not tell them about the risky nature of the investments, according to Stoltmann. UBS also put its own financial interests ahead of its clients by steering clients to funds containing bonds underwritten by UBS, he said.

The bank said it does not comment on pending litigation.

A spokeswoman for UBS in New York, Karina Byrne, said the firm believed the funds they were selling were a sound investment that had provided investors strong returns in the past as well as tax benefits.

UBS, which was provided with key parts of the recording, declined to confirm their authenticity or say whether it reviewed them.