In November 2018, a former client of D.A. Davidson & Co. won an award in a FINRA arbitration for compensatory damages for $783,286.94, plus 6% interest, $120,000 in attorney’s fees and $46,865 in costs, and the non-refundable $600 filing fee for losses.
The causes of action included fraudulent misrepresentation; fraudulent concealment; negligent misrepresentation; negligence; negligent supervision; negligent communications with Claimants; negligent provision of investment advice; violation of the Securities Act of Nebraska; breach of fiduciary duty; and breach of contract. The causes of action relate to investments in the following bonds: Cliffs Natural Resources; Puerto Rico Public Finance Corporation (PFC); and Puerto Rico Electric Power Authority (PREPA).
Additional bonds at issue include: Puerto Rico Commonwealth Refunding Public Improvement; Employees Retirement System Government Commonwealth Puerto Rico Retail Senior Pension Funding Series A; Puerto Rico Commonwealth Infrastructure Financing Authority; Puerto Rico Buildings Authority Revenue Refunding Government Facilities; and Puerto Rico Commonwealth Aqueduct and Senior Lien.
The FINRA arbitration hearing was conducted in Denver, Colorado.
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.
Over the past few years, oil prices have significantly declined. A supply glut in 2014 and 2015 led to some of the lowest prices the market has seen in recent years. In turn, securities values also dropped. The volatile energy sector experienced significant turmoil, and many energy companies were negatively impacted when global crude oil prices fell below $40 per barrel at the end of 2015. This was the lowest level since early 2009, as supply was in excess of global demand. Oil and gas companies experienced a spike in bankruptcies, which have left many investors reeling.
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, D.A. Davidson & Co. 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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