As if fears over rising interest rates and months of mass selling weren’t enough of a head wind for municipal bond investors, Puerto Rico now appears to be running out of time to get its fiscal house in order. According to an Investment News report, Puerto Rico was put on review by another major ratings agency, paving the way to what could be a shock to the municipal bond market.
Moody’s Investor Services Inc. has apparently become the second of the three major ratings agencies to put Puerto Rico general obligation municipal bonds and related securities officially on watch for a downgrade to below-investment grade. The review follows a similar action by Fitch Ratings Inc. in mid-November.
The S&P Municipal Bond Puerto Rico Index has fallen 18.49% year-to-date through Dec. 11, almost nine times the loss of the S&P Municipal Bond Index, which measures the performance of the entire universe of investment-grade municipal bonds.
The falling prices, and consequently higher yields, are making it harder for Puerto Rico to borrow money to fund its debt.
With approximately $70 billion in outstanding debt, a Puerto Rico restructuring, actual default or bailout by the federal government would be by far the largest of its kind. Detroit, for example, has $18 billion of municipal bond debt outstanding.
According to Morningstar, more than three-quarters of municipal bond funds have at least some exposure to Puerto Rico bonds. Some of the funds with the most exposure include: Oppenheimer Rochester Funds, UBS Puerto Rico AAA Portfolio Bond Fund, UBS Puerto Rico AAA Portfolio Bond Fund II, UBS Puerto Rico AAA Portfolio Target Maturity Fund, UBS Puerto Rico GNMA & US Government Target Maturity Fund, UBS Puerto Rico Fixed Income Fund, UBS Puerto Rico Fixed Income Fund II, UBS Puerto Rico Fixed Income Fund III, UBS Puerto Rico Fixed Income Fund IV, and the UBS Tax-Free Puerto Rico Fund.
The White Law Group continues to investigate the liability that brokerage firms may have for recommending municipal bond funds with a high exposure to Puerto Rican debt.
Broker-dealers are required by securities law and industry regulations to adequately disclose the risks associated with all investment recommendations, and to perform the necessary due diligence to determine if the investment is suitable for each individual client based on risk tolerance, investment experience, liquidity needs, net worth and financial objectives. When broker-dealers violate securities laws and regulations they can be liable for investment losses.
If you are concerned about your investment in a municipal bond fund over-exposed to Puerto Rican debt and would like to speak to a securities attorney about whether you have a potential FINRA dispute resolution claim, please call The White Law Group’s Florida office at 561-807-6804 for a free consultation.
Dedicated to the representation of investors in FINRA arbitration claims, The White Law Group, LLC is a national securities fraud law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
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Have you suffered investment losses as a result of your purchase of IMH Financial Corporation (formerly known as the IMH Secured Loan Fund)? If so, The White Law Group may be able to help you recover your losses through a FINRA dispute resolution claim against the broker-dealer that sold you the investment.
Since 2003, IMH Financial Corporation has been a real estate lender and investor in commercial mortgage loans. In 2010, IMH Financial converted from a limited liability company (IMH Secured Loan Fund, LLC) into a corporation to better position the company for an initial public offering (IPO). Unfortunately for investors, the company has yet to achieve an IPO.
According to a Form 8-K filed with the Securities and Exchange Commission, IMH Financial is awaiting final approval of a settlement agreement in a class action lawsuit involving the company’s conversion transaction. It is unclear when unitholders involved in the class action will be compensated.
Investments in real estate debt are complex, high-risk products that often lack liquidity and areintended for sophisticated and institutional investors. Unfortunately for many investors, broker-dealers that sold IMH Financial often overlooked suitability requirements and sold the investment to unsophisticated, low net worth investors.
Brokerage firms have a fiduciary duty to perform due diligence on any investment it offers and to make sure investment recommendations are in line with a client’s age, risk tolerance, net worth, investment objective and financial needs. Given what is known about IMH Financial, it appears that some broker-dealers that sold the investment failed to perform the adequate due diligence and could be held liable for investment losses.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.
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The White Law Group continues to investigate claims on behalf of investors that purchased CNL Lifestyle Properties and other non-traded RIETs. Specifically, the firm is investigating the liability that brokerage firms may have for improperly selling these high-risk, illiquid investments.
CNL Lifestyle properties is real estate investment trust (REIT) that focuses on income producing lifestyle properties such as golf, ski, marinas and others. According to Form 8-K filed with the SEC, as of November 2013 CNL Lifestyle Properties owns a portfolio of 138 properties throughout the US and Canada.
One of the major downfalls of REITs is the lack of liquidity. Non-traded REITs are not sold on the public market, therefore they lack liquidity. This prevents shares from being sold quickly and forces investors to search for a secondary market that is often very limited and priced significantly below the purchase price. CNL Lifestyles Properties sold on the secondary market from $5.50 to $5.75 in September of this year.
Many brokerage firms target investors that were retired or near retirement, often emphasizing the potential income the REIT may provide. Unfortunately, some brokerage firms failed to disclose that it is not uncommon for REITs to borrow money in order to make distributions. In addition, distributions are often merely a return of principle. REITs are complex high risk products that are not suitable for most investors.To the extent that a brokerage firm improperly sold a non-traded REIT to an investor that either didn’t understand the product or could not afford the risk, that firm may be liable for the resulting losses.
Brokerage firms have a fiduciary duty to its clients to perform adequate due diligence on an investment prior to recommending it for sale to its clients, as well as to ensure that any investment recommended is appropriate in light of the investor’s age, investment experience, net worth, and investment objectives. Given what is now known about CNL REITs (and the many problems with this offering), it is clear thatcertain of the brokerage firms that sold this investment failed in its fiduciary duty to its clients.
In addition to CNL Lifestyle Properties, The White Law Group is investigating the liability of brokerage firms that sold the following CNL REITs:
- CNL Healthcare Properties
- CNL Growth Properties
- CNL Retirement Properties
- Global Income Trust
If you suffered losses as a result of your purchase of a CNL REIT, please call the securities attorneys of The White Law Group at (312)238-9650 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on the firm, please visit http://www.whitesecuritieslaw.
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According to WICS News Channel 20, former financial advisor and broker David Lisnek was arrested and charged with financial exploitation of the elderly. Lisnek allegedly defrauded an 84-year-old women and encouraged her to write him personal checks intended for investment transactions.
The Financial industry Regulatory Authority (FINRA) suspened Lisnek in November alleging fraud associated with cash investments in exchange for REIT stocks. As a result, he was fired from LPL Financial. According to Lisnek BrokerCheck report, he worked at LPL Financial from Sept. 2004 through Nov. 2013.
It is unclear what happened to the funds or if Lisnek has the money to repay the client. According to his BrokerCheck Report Lasnek filed for bankruptcy in 2006.
One option to recover investment losses is through FINRA dispute resolution. Brokerage firms have a supervisory responsibility to monitor the activity and conduct of their brokers. When a FINRA registered broker, such as Lisnek, violate security regulations and misappropriates client funds, the brokerage firm may be liable for negligent supervision and responsible for losses.
The White Law Group is dedicated to the representation of investors in claims against their financial adviser and brokerage firm. If you believe that you have been the victim of securities fraud and would like to discuss your litigation options, please call 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 Boca Raton, Florida.
For more information on The White Law Group, visit www.WhiteSecuritiesLaw.com.
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According to new s release, the Financial Industry Regulatory Authority (FINRA) ordered broker-dealer J.P Turner & Co to pay more than $700,00 in restitution to customers. FINRA found that between 2008 and 2009 J.P. Turner failed to properly supervise the sale of leveraged and inverse ETFs. Apparently J.P. Turner failed to provided adequate training for their registered representatives (brokers) and allowed them to sell these potentially volatile non-traditional ETFs without fully understanding the risks and features.
In addition, FINRA announced that between 2008 and 2010 J.P. Turner failed to maintain a supervisory system designed to prevent unsuitable mutual fund switching. Due to the cost of commissions and transactions fee, mytual funds are typically held as long-term investments. According to Investment News, on 537 occasions brokers recommended that customers sell mutual funds less than one year after their purchase. As a result, customers paid more than $500,000 in commissions and sales charges.
Broker-dealers have a responsibility to perform adequate due diligence to understand the risks and benefits of an investment. In addition, industry regulations require brokers to take into account such factors as age, net worth, risk tolerance and investment objectives to determine suitable investment recommendations. When broker-dealers fail to comply with industry regulations and fail to adequately supervise their brokers they can be liable for investment losses. J. P. Turner settled the dispute without admitting or denying FINRA’s charges.
The foregoing information, which is publicly available, has been provided by The White Law Group. 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 Boca Raton, Florida.
The firm solely represents investors in claims against investment advisers and broker-dealers. If you believe would like to speak with a securities attorney regarding a potential claim against your broker-dealer, please contact the The White Law Group at 312-238-9650 free a free consultation.
To learn more about The White Law Group, visit www.WhiteSecuritiesLaw.com
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