Bonds

The Frankowski Firm is investigating potential claims against Wedbush Securities broker Mark Augusta for unsuitable and misrepresented sales of Puerto Rican municipal bonds and/or municipal bond funds to Wedbush customers. These bonds have declined precipitously in value, brought on by economic instability within the Commonwealth and worsened by the devastation of Hurricane Maria. Because of the Commonwealth’s poor economic position, Puerto Rican municipal bond funds lacked the stability of traditional governmental bond funds and Puerto Rico has defaulted on over $200 million in bond payments to date. The rating agencies have downgraded Puerto Rican municipal bonds to below investment grade, or “junk,” status. Unlike typical municipal bond funds, the Puerto Rican municipal bond funds were not suitable for conservative investors seeking income and capital preservation from their investments, nor should they have comprised a high percentage of a customer’s portfolio. The Frankowski Firm is concerned about Wedbush’s supervision of Puerto Rican municipal bond sales in light of other recent Wedbush [...]

Municipal bonds are a commonly-used source of revenue for governments: they are relatively stable, tax-free investments, and in times of rising interest rates, their value increases. Puerto Rico’s municipal bonds have been declining in value since 2013, and the recent declaration of municipal bankruptcy, along with devastating hurricanes like Maria, have led to an even steeper decline. Investors who purchased these bonds, either directly or via closed-end bond funds created by financial firms like UBS, have felt the sting of the losses. The losses have been particularly frustrating in these funds as investors typically look to municipal bonds as relatively safe, stable investments. To date, Puerto Rico has defaulted on over $200 million in bond payments and rating agencies have downgraded Puerto Rican municipal bonds to below investment grade, or “junk,” bond status. Obviously, therefore, the value of Puerto Rico’s municipal bonds (and any corresponding closed-end bond funds) has fallen dramatically. Making matters worse, many investors were overly-concentrated in the [...]