The Securities and Exchange Commission (SEC) has fined 13 brokerage firms, including Charles Schwab, J.P. Morgan, Oppenheimer, TD Ameritrade, and UBS Financial, for violating a rule that is meant to protect investors from improper sales of high-risk Puerto Rican municipal bonds. The fines range from $54,000 to $130,000.
The SEC sanctions are the first under the Municipal Securities Rulemaking Board (MSRB) Rule G-15(f), which establishes the minimum denomination requirement for the sales of municipal bonds. The minimum denomination amounts are the least amount of a given municipal bond that a broker dealer is permitted to sell to an investor in one transaction. The more risky the bond, the higher the minimum. This is meant to ensure that the bond investments are suited to the appropriate investor.
According to the SEC’s investigation, there were 66 cases in which brokerage firms sold bonds in amounts below the $100,000 minimum which was set earlier this year for the $3.5 billion Puerto Rican municipal junk bond offering. The 13 sanctioned brokerage firms, which also included National Securities Corp., Stifel Nicolaus, Riedl First Securities, Wedbush Securities, Hapoalim Securities USA, Interactive Brokers, Investment Professionals and Lebenthal & Co, neither admitted nor denied any wrongdoing and agreed to be censured.
In order to protect investors, there are rules in place which require brokerage firms to establish and implement a reasonable supervisory system. These rules require supervisors to monitor firm activities to ensure they comply with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker dealers do not establish and implement such protective measures, they may be liable to account holders for damages stemming from a lack of supervision. As a result, investors can bring forth claims to recover damages against brokerage firms like J.P. Morgan, Charles Schwab, Oppenheimer, and UBS Financial, which have a fiduciary duty to protect their customers’ interests.
Have you suffered losses resulting from an unsuitable investment? Did your stockbroker or broker-dealer recommend that you invest in a high-risk Puerto Rico junk bond? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is actively investigating and accepting clients with valid claims against financial advisors, stockbrokers, and their brokerage firms who may have inappropriately recommended these Puerto Rico bonds to investors.
This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over , Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues, including many Puerto Rico bond cases. The lawyers at our firm are devoted to representing investors throughout the United States and internationally! Please visit our website, www.secatty.com, call (800) 732-2889, or email Mr. Pearce at firstname.lastname@example.org for answers to any of your questions about this article and/or any related matter.