13 Firms Fined by SEC Over Puerto Rico Junk Bond Sales

The Securities and Exchange Commission (SEC) announced on Monday that 13 major Wall Street firms sold Puerto Rico junk bonds to retail investors who may not have understood the risk involved. Units of UBS Financial Services Charles Schwab, Interactive Brokers, Investment Professionals, Lebenthal & Co, National Securities Corporation, Oppenheimer & Co., Riedl First Securities of Kansas, Stifel Nicolaus & Co., TD Ameritrade and Wedbush Securities all sold the bonds and have all been charged. The firms have been ordered to pay penalties ranging from $54,000 to $130,000.

The $3.5 billion deal was the largest municipal junk bond sale in U.S. History. It included limits to make sure smaller investors were not caught holding the risky debt. There was a minimum of $100,000 for purchase. The SEC stated it found 66 instances when dealers sold the bonds to investors below that denomination. In addition, a separate $5.2 million settlement was made with UBS, stemming from the sale of Puerto Rico’s closed end bond funds. If you invested money with UBS or with the Puerto Rican bond funds, please call our Chicago-based securities fraud office to speak to an attorney at 312-332-4200.

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