January 2014 - Law Offices of Robert Wayne Pearce

Jan 21, 2014

Puerto Rico Gov. Padilla’s Spins For Hope and Prayers

Governor Alejandro Garcia Padilla published an article in the Huffington Post’s Latino Voices section today spinning his administration’s accomplishments in the past year. He claimed “Puerto Rico’s Economy Is Stronger Today Than It Was a Year Ago.” He cited the so-called improvements in pension reform, revenue improvement and restructuring of public corporations as the reason for his claims. The article read more like another politician speech than a realistic account of the state of the economy on the Island. The constitutionality of the pension reforms measures are under review by the Supreme Court. He claimed that his administration created over 25,000 jobs but the latest federal report indicated that Puerto Rico has lost more than 40,000 jobs over the last year. He didn’t say anything about the Government Development Bank’s latest Economic Activity Index report that the economy continued to contract in November 2013 over 5.7% on a year-to-year basis (the 12th consecutive monthly contraction in the last year). The Puerto Rico economy has been contracting in greater and greater amounts every month over the last year. Nor did he say anything about the fact that his own administration had dropped its own expectations for any growth this year. He was also silent about the fact that revenues from the sales and use tax (funding the Covina bonds) are also short of estimates this year. Nor did he say anything about the $688 million increase in the fiscal budget for this year. And so, what is his basis for the spin? Hope and Prayers?

Jan 16, 2014

Little Help For Investors From The Puerto Rico Supreme Court And Rumors

Yesterday, the Puerto Rico Supreme Court temporarily stopped the enforcement of the law signed by Gov. Alejandro Garcia Padilla on Christmas Eve with reformations to the teacher pension system. The Supreme Court blocked the reforms to the pension system that the government insists it needs to avoid a downgrade of Puerto Rico debt securities to junk status. Gov. Garcia Padillo stated “saving the teacher pension system and guaranteeing them sufficient pensions in line with the Island’s fiscal realities is an issue that demands a deep sense of responsibility, as does saving Puerto Rico’s credit rating,” a credit rating that is just one step away from junk status. Today the Supreme Court held a hearing on a lawsuit challenging a separate reform of the pension fund for the judicial system in Puerto Rico. You don’t have to think too hard as to what their decision will be in light of their ruling on teacher pension reform.

Jan 13, 2014

Thomas Mikolasko Fined and Suspended by FINRA for Sales of Defaulted MMM Notes

Thomas Mikolasko, Registered Principal formerly with HFP Capital Markets, LLC (HFP) of New York, New York, was fined $75,000 and suspended for 18 months by the Financial Industry Regulatory Authority (FINRA) for his participation in the sale of Senior Secured Zero Coupon Notes which were sold to HFP customers for the entity Metals Millings and Mining, LLC (MMM). Mr. Mikolasko was an investment banker with HFP and was involved in the firm’s sale of $3 million of MMM Notes which have defaulted, leaving investors with neither their principal repaid nor the promised 100% return on their investment.

Jan 10, 2014

Joseph Giordano Barred By FINRA for Sales of Unregistered and Unsuitable Debentures

Joseph Anthony Giordano, former Registered Principal of Capital Investment Group, Inc. (CIG) of Annapolis, Maryland and more recently with Meyers Associates, L.P. of Edgewater, Maryland, submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) sanctions and findings for the distribution and solicitation of unregistered Empire debentures, the solicitation of which was prohibited by CIG, and for making unsuitable recommendations to his customers.

Jan 4, 2014

Conflicts of Interest In 401(k) Retirement-Plan Rollovers Are Prevalent

The lawyers at Robert Wayne Pearce, P. A. are well aware of the conflicts of interest of financial advisors who recommend to prospective clients that they withdraw funds from their 401(k) retirement plans and roll them over into an IRA account at the brokerage firm when they terminate their employment. The Financial Industry Regulatory Authority (FINRA) has finally woken up and given notice to all registered financial advisors and their employers that the pitch to move funds to IRA rollover accounts must be “fair and balanced;” two words that are foreign to many financial advisors.

Jan 2, 2014

Puerto Rico Borrowing From Self Is Not A Good Sign For UBS Puerto Rico Investors

The latest news from Puerto Rico is that Government Development Bank (GDB) has borrowed $110 million from the State Insurance Fund (SIF) for its liquidity needs. The GDB President attempted to put a positive spin on the loan as achieving two objectives, “increasing GDB’s liquidity and improving the cash flow of SIF,” but borrowing from Peter to pay Paul is never a good strategy, even for a legitimate government. Puerto Rico is ostensibly seeking short-term deals to raise cash as it waits for conditions to improve in the US municipal bond market but the problem is with the Puerto Rico bond market and its economy. Noteworthy is the fact that the GDP still had to pay 8% annually for the loan and then pay it all back in less than 6 years. If 8% is the going rate within the government intra-agency borrowing what are the lenders on the outside going to charge the territory?