In January 2020, a former client of FMSBonds, Inc. won an award in a FINRA arbitration for compensatory damages for $375,000 plus in $80,000 in attorney’s fees due to Puerto Rico bond investment losses.
The causes of action included breach of fiduciary duty; breach of an advisor’s duty of reasonable care; breach of an advisors’ duty to supervise and ensure compliance; negligent and intentional misrepresentation; fraud and deceit; breach of contract and the covenant of good faith and fair dealing; negligence; violations of State Securities Laws prohibiting misrepresentations in connection with trade practices; and violations of applicable NASD Rule of Fair Practice, MSRB, NYSE, FINRA, and American Stock Exchange Rules. The FINRA arbitration hearing was conducted in Boston, Massachusetts.
Puerto Rico suffers from long-term financial and economic deficiencies that rendered its credit increasingly more speculative. The deterioration of Puerto Rico’s financial condition culminated in its debt being downgraded to junk status or speculative (below investment grade). For the past several years, Puerto Rico has been struggling with compounding debt and economic decline. As a result, the value of Puerto Rico’s municipal tax-free bonds has considerably fallen. Since September 2013, when the steep decline in Puerto Rico bond values began, investors holding these bonds have suffered massive losses. In May 2017, Puerto Rico filed for bankruptcy protection from creditors in what is being described as the largest municipal bankruptcy filing in history.
According to their website, “FMSbonds, Inc. is a municipal bond firm that provides individual investors with exceptional value and insight in the tax-free and taxable municipal bond markets… We understand the distinctive nature of tax-free municipal bonds and recognize that even the most sophisticated investors need more information to understand the nuances of these securities.”
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, FMSBonds, Inc. may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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