November 5, 2014 Comments (0) Blog, Securities Fraud

13 Brokerage Firms Sanctioned for Improper Sales of Puerto Rico Junk Bonds

(Last Updated On: July 17, 2015)

The Securities and Exchange Commission sanctioned 13 brokerage firms for improper sales of Puerto Rico junk bonds. The SEC found that several firms sold the junk bonds below minimum denomination requirements.

Minimum denominations are the smallest amount of bonds that can be sold in a single transaction. Due to the greater risk of default on junk bond they are not appropriate for many retail investors. Setting minimum denominations helps discourage retail investors and ensure that the junk bonds are purchased by investors that are able to make a sizable investment and incur the risks.

According to the SEC press release, surveillance of the municipal bond market detected improper sales below a $100,000 minimum denomination set by the Commonwealth of Puerto Rico. In a subsequent  investigation, the SEC identified 66 occasion when brokerage firms sold the junk bonds below the set minimum denomination.

The following firms were sanctioned:

Charles Schwab & Co. – $61,800

Hapoalim Securities USA – $54,000

Interactive Brokers LLC – $56,000

Investment Professionals Inc. – $67,800

J.P. Morgan Securities – $54,000

Lebenthal & Co. – $54,000

National Securities Corporation – $60,000

Oppenheimer & Co. – $61,200

Riedl First Securities Co. of Kansas – $130,000

Stifel Nicolaus & Co. – $60,000

TD Ameritrade – $100,800

UBS Financial Services – $56,400

Wedbush Securities Inc. – $67,200

Brokerage firms have a fiduciary duty to make investment recommendations that are in the best interest of their clients.  When a firm’s selling practices violate securities rules and regulations they may be liable for investment losses.

If you suffered losses in Puerto Rico bonds as a result of investments made with any of these firms and would like to discuss your litigation options, please contact The White Law Group at 312-238-9650 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Vero Beach, Florida.

To learn more about the firm, please visit www.WhiteSecuritiesLaw.com.

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