FINRA recently announced that Andres Luis Delmas, in Miami, Florida, has been fined $15,000 by FINRA and suspended from association with any FINRA member firm in any capacity for 60 days. Without admitting or denying, Andres Delmas consented to findings that he made unsuitable recommendations to customers to buy inverse floater Collateralized Mortgage Obligation (CMO) securities. The findings further stated that Delmas did not have reasonable grounds to believe that the CMO’s were suitable for the customers in light of their investment experience, objectives and risk tolerances. Finally, FINRA’s findings indicate that Delmas’ customers lost more than $163,000 as a result of these unsuitable inverse floater CMO investments.
A collateralized mortgage obligation (CMO) is a financial debt vehicle that was first created in June 1983 by the investment banks Salomon Brothers and First Boston for Freddie Mac.
Legally, a collateralized mortgage obligation is a special purpose entity that is wholly separate from the institution(s) that create it. The entity is the legal owner of a set of mortgages, called a pool. Investors in a CMO buy bonds issued by the entity, and receive payments according to a defined set of rules. The mortgages themselves are called the collateral, the bonds are called tranches (also called classes), and the set of rules that dictates how money received from the collateral will be distributed is called the structure. The legal entity, collateral, and structure are collectively referred to as the deal.
If you questions about investments you made with Andres Luis Delmas or in Collateralized Mortgage Obligations, or if you believe that you have been the victim of a securities fraud, The White Law Group may be able to help. To speak to a securities attorney, please call our Chicago office at 312-238-9650 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
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