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FINRA Sanctions Popular Securities Over PR Municipal Bond Fund Sales
Popular Securities, Inc. (Popular Securities) was recently sanctioned by the Financial Industry Regulatory Authority (FINRA) for violations in their dealings related to Puerto Rico municipal bond funds.
Managers touted the Puerto Rico bond funds as providing tax benefits to investors, such as exemption from United States estate and gift taxes, as well as triple tax benefits. Instead, due to depressed economic activity and rising debt levels, investors lost loads of money in these funds.
FINRA alleges that for two years ranging from July 1, 2011 to June 30, 2013, Popular Securities continued to recommend the purchase of Puerto Rico municipal bonds and bond fund securities even after the Puerto Rico general obligation bond rating was downgraded in December 2012.
FINRA also alleges that Popular Securities failed to establish a proper supervisory system that outlined steps the firm should take to review customers’ securities purchases outside of a quarterly review of “elderly” customer accounts. Additionally, FINRA found that Popular Securities did not have a system in place that required supervisors to review accounts for concentrated purchases in a single security, substantially similar securities or securities in a single geographic region. Popular also did not document any such reviews, according to the FINRA allegations.
There are 23 of these Puerto Rico bond funds that were recommended to various investors: Tax-Free Puerto Rico Fund I-II; Tax-Free Puerto Rico Target Maturity Fund; Puerto Rico AAA Portfolio Target Maturity Fund; Puerto Rico AAA Portfolio Bond Fund I-II; Puerto Rico GNMA & U.S. Government Target Maturity Fund; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund; Puerto Rico Fixed Income Fund I-VI; Puerto Rico Investors Tax-Free Fund I-VI; Puerto Rico Tax-Free Target Maturity Fund I-II; and the Puerto Rico Investors Bond Fund.
If you received an unsuitable recommendation of investing in Puerto Rico municipal bonds and suffered significant losses are a result, you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.