Ferrer, through his lawyer, provided Reuters with his own English translation of his comments on the recording.

He said in a statement that UBS funds have provided attractive investment opportunities for certain investors at various times over the past 20 years. "However, as I reminded the financial advisors both during and after the sales meeting, it was and is up to each financial advisor to recommend only those financial products that are suitable to their individual customers' needs," said Ferrer, who left UBS last July in a restructuring.

Some of the funds lost half to nearly two-thirds of their value between March 2011 and October 2013, and have failed to recover since. To be sure, a few of the funds with AAA-rated debt, such as Fannie Mae mortgage bonds, are higher now than they were in March 2011.

The investors in the arbitrations include 88-year-old widow Mabel Ladicani and her daughter, Vanessa Hernandéz, who claim that in October 2011, UBS broker Antonio Lopez switched money they had invested in a fund of mostly AAA-rated Puerto Rican debt into one of the riskier debt funds that UBS was selling.

Ladicani, who runs a fabric store in San Juan, said she does not remember agreeing to the change. Her investment dropped by more than half to $196,500 from an earlier $400,000 in a two-month period in the middle of 2013, according to her Houston-based lawyer Samuel Edwards. Ladicani, who also took a loan from UBS for a property purchase with the fund shares as collateral, says the losses ended her hopes of retirement. "I can't sleep - it changes your life," she said. "I still work in the store every day."

UBS declined to discuss Ladicani's case. Lopez did not return calls seeking comment.

The recording of Ferrer's comments could become evidence in two whistleblower complaints involving the funds filed at the U.S. Securities and Exchange Commission, a person familiar with the cases said. An SEC spokeswoman declined to comment.

Reuters reported last June that the FBI was investigating allegations that some UBS Puerto Rico clients were improperly directed to borrow money from another UBS unit to buy the fund shares. It is unclear if that probe is still continuing. An FBI spokeswoman declined to comment.

Many of the funds were highly concentrated in the debt of the Caribbean island's government and related entities. But they were being sold at a time when there were already fears about the size of Puerto Rico's debt burden and the weakness of its economy.

The debt picture has deteriorated further since. The island has more public debt per capita than any U.S. state and its pension funds for government employees are severely underfunded.

A senior broker who spoke at the 2011 meeting, Ramon Almonte, told the brokers that Puerto Rico's "fiscal and credit situation has gotten miraculously better" and that the firm has to stop "being an agent of fear, of panic," according to the recording. At the time, there had been some modest improvements in the island's outlook, including an upgrade of Puerto Rico's credit rating by Standard & Poor's, though the pickup didn't last.

Almonte, whose voice on the recording was identified by another person who attended the meeting, can be heard on the tape saying it was important that brokers try to dissuade those wanting to sell the fund shares.

Almonte, who still works for UBS, said in a statement that the funds had been very good products for the bank's clients.

At the time of the meeting, Ferrer and UBS Puerto Rico were the subject of an earlier SEC probe into its sales tactics for the same group of funds in 2008-2009. UBS paid a $26.6 million penalty in 2012 to settle allegations that it had offloaded shares in the funds from its own balance sheet before filling its customers' sell orders. The bank neither admitted nor denied the allegations.

Ferrer and another UBS executive, Carlos Ortiz, fought the case and they were later cleared of wrongdoing by an SEC administrative judge in 2013. The judge found that they had not misled customers or engaged in fraud, and also said the SEC had not adequately proven parts of its case. UBS did not seek to modify the prior settlement, a spokesman said.

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