Tag Archives: puerto rico bond loss

Stifel Nicolaus Ordered to Pay Elderly Couple For Puerto Rico Bond Losses

Over the past few years St. Louis based Stifel Nicolaus & Co. has faced a number of problem with regulators as well as actions filed by disgruntled customers, including:

  • In 2014, Stifel Nicolaus  was fined $60,000 by the Securities and Exchange Commission to resolve securities regulator’s allegations that the improperly sold Puerto Rico junk bonds to retail investors by selling bonds below the minimum $100,000 denomination established by the issuer.
  • In February 2017, a FINRA arbitration panel in Dallas, Texas, awarded two former elderly customers over $117,000 for losses suffered as a result of having invested in Puerto Rico municipal bonds. Follow this link to the FINRA record of Stifel Nicolaus broker Robert Kyle Ratcliff. FINRA Case 15-03427, June and Perry Burns v Stifel Nicolaus.

Puerto Rico Debt Crisis

In early 2014, various credit rating agencies downgraded the debt of Puerto Rico to non investment grade, better known as junk status or speculative grade. This downgrade triggered acceleration clauses requiring the repayment of some debt within months, rather than years.

Puerto Rico has over $70 billion of outstanding debt, with a debt to GDP ratio of about 68%. While about $30 billion (42%) of Puerto Rico’s debt is owned by residents of Puerto Rico, the larger portion is owned by non-residents, primarily residents of the continental United States.

Investors who have suffered losses on Puerto Rico’s bonds purchased from a broker employed by Stifel Nicolaus & Co. may be able to recover damages through FINRA arbitration.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Losses on Oppenheimer Bond Fund Containing Puerto Rico Debt?

If you own an Oppenheimer Municipal Bond Fund that is down 10% or more, chances are that bond fund contains Puerto Rican municipal debt.

Puerto Rico’s economy has been suffering since 2006. Its debt is over $70 billion, unemployment is high and the population is shrinking. According to Morningstar, most bond funds contain some Puerto Rican debt. Owning a small percentage of a troubled investment in a fund is not an issue, however it becomes an issue when the percentage of Puerto Rican debt in a fund is too great.
A recent Investment News article points out that the Oppenheimer Rochester Virginia Municipal Bond Fund (ORVAX) is down more than 15% this year, ranking it last among single-state municipal bond funds and second-worst among all municipal bond funds. Since the name suggests that the investment is in Virginia debt, investors may be surprised to learn that the Oppenheimer Virginia fund held 33% of its assets in Puerto Rican debt as of August 2013, according to the article.
Other Oppenheimer funds with high exposure to Puerto Rican bonds include:
 
Oppenheimer Rochester VA Muni A
Oppenheimer Rochester NC Muni A
Oppenheimer Rochester MD Muni A
Oppenheimer Rochester AZ Muni A
Oppenheimer Rochester MA Muni A
Oppenheimer Limited Term NY Muni A
Oppenheimer PA Muni A
Oppenheimer Rochester Michigan Muni A
Oppenheimer NJ Muni A
Oppenheimer Rochester AMT-Free NY Muni A
Oppenheimer Rochester Ohio Muni A
Securities regulators recently put Oppenheimer on notice that an investigation  has been initiated against Oppenheimer, Fidelity, and UBS Financial Services in  connection with the sale of Puerto Rican municipal debt. See this for more information.
If you have suffered losses as a result of an investment in
Puerto Rican debt, either directly or in a bond fund, you may be able to recover damages.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Kiplinger Warns Investors Of Dangers in Puerto Rican Bonds

Last month, on September 17, 2013, Kiplinger warned investors of the dangers of Puerto Rican municipal debt. This month Massachusetts securities regulator William Galvin initiated an inquiry by contacting UBS,  Oppenheimer and Fidelity’s FMR Co. regarding their sales practices related to the island’s bonds.

According to the Kiplinger article, Puerto Rico, which has population of less than 4 million people have outstanding government debt of $53 billion. The only states with more debt are New York and California. In case you wonder, those states have populations of 19.5 million and 38.2 million, respectively. The municipal debt per person is astronomical in Puerto Rico compared to New York and California. This equates to per capita debt of $11,000 in Puerto Rico. Compare that to the per capita income of $10,500 and it is easy to understand the reason there is a problem.
Kiplinger lists the following 20 funds with greatest exposure to Puerto Rican bonds:
Fund % in PR Bonds
Franklin Double Tax-Free Income A 65.9%
Oppenheimer Rochester VA Muni A 31.1%
Oppenheimer Rochester NC Muni A 30.6%
Oppenheimer Rochester MD Muni A 30.3%
Oppenheimer Rochester AZ Muni A 27.1%
Oppenheimer Rochester MA Muni A 26.5%
Oppenheimer Limited Term NY Muni A 26.2%
Oppenheimer PA Muni A 25.1%
Rochester Municipals A 24.8%
Oppenheimer Rochester Michigan Muni A 22.2%
Wells Fargo Advantage WI Tax-Free Inv 21.0%
HighMark WI Tax-Exempt A 20.4%
Oppenheimer NJ Muni A 20.2%
Oppenheimer Rochester AMT-Free NY Muni A    19.0%
Oppenheimer Rochester Ohio Muni A  15.9%
Nuveen MD Muni Bond I 15.0%
Nuveen CT Muni Bond A 14.5%
Nuveen WI Muni Bond A 14.1%
Nuveen VA Muni Bond A 13.5%
Western Asset Oregon Municipals A 13.5%
Brokers and brokerage firms have a duty to make suitable recommendations to investors. Given the problems Puerto Rico has had with its economy over recent years, it would not be suitable to recommend to conservative investors to invest in funds which had significant exposure to Puerto Rican municipal debt.
If you have suffered losses due to the decline of funds you own containing Puerto Rican bonds, you may be able to recover damages.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900