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.