Did Former RBC Capital Markets, LLC Financial Advisor Paul Blum Sell You Puerto Rico Bonds?

Erez Law continues to investigate claims against former RBC Capital Markets, LLC financial advisor Paul Blum (CRD# 735003) regarding recommending unsuitable Puerto Rico bonds. Erez Law previously reported on Blum for his speculative energy sector recommendations in September 2017 here and February 2017 here. Blum was registered with RBC from 2009 to 2015, when he was fired for “lack of confidence.”

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.

In August 2017, Blum was barred by FINRA after he consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony during the course of an investigation in connection with customer complaints and arbitration claims alleging, among other things, unsuitable trading.

Blum has been the subject of 22 additional customer complaints, dating from 1995-2016, according to his CRD report:

• June 2017. “Client alleges unsuitable recommendations leading to an overconcentration of energy bonds and Puerto Rico municipal bonds. Estimated period is 2009 to 2015.” The customer is seeking $250,000 in damages and the case is currently pending.
• August 2016. “Claimants alleges that the representative was involved as an intermediary or conduit in alleged unsuitable recommendations of energy sector corporate bond investments, in an unknown time period.” The customer seeks $525,000 in damages.
• July 2016. “Clients allege financial consultant recommended unsuitable corporate energy bonds, in period 5/2013 to 9/2015.” The customer seeks damages of $200,000.
• June 2016. “Claimants alleges that the representative was involved as an intermediary or conduit in alleged unsuitable recommendations of energy sector corporate bond investments. Period at issue is unstated.” The customer seeks damages of $6 million.
• May 2016. “Client alleges claims that the client’s account was excessively traded and was concentrated in oil and gas bonds. Recent time frame is 2014 to 2016.” The customer seeks $300,000 in damages.
• May 2016. “Claimant alleges that the representative was involved as an intermediary or conduit in unsuitable recommendations of energy sector corporate bond investments.” The customer seeks $75,000 in damages.
• May 2016. “Claimant alleges that the representative was involved as an intermediary or conduit in unsuitable recommendations of energy sector corporate bond investments.” The customer seeks $2,250,000.
• May 2016. “On behalf of the client, an attorney alleges that investments were misrepresented and that three purchases which occurred in the client’s account were unsuitable and unauthorized. Time frame is 7/2015 to 9/2015.” The customer sought $45,000 in damages and was granted $29,000.
• March 2016. “Clients allege unsuitable (SP) and concentrated recommendations & unauthorized transactions in corporate energy bonds, in an approximate period of 2009 to late 2015.” The customer sought $445,600 in damages and was awarded $162,500.
• March 2016. “Claimant alleges that the representative was involved as an intermediary or conduit in unsuitable recommendations of energy sector corporate bond investments.” The customer seeks $325,000 in damages.”
• March 2016. “On behalf of client, POA verbally complains that the client suffered losses due to unsuitable investments and excessive activity. Time frame is 1/2014 to 1/2016.” The customer sought $600,000 in damages and was granted $393,000.
  March 2016. “Client alleges investments in energy bonds were unsuitable and RBC failed to provide ongoing material information regarding the investments, in period 2010 to 2015.” The client seeks damages in the amount of $1,200,000.
• February 2016. “Client claims that he was unaware of his stated investment objective and risk tolerance and that his financial advisor never informed him of the risk of his portfolio. Time frame is approximately 5/2013 to 1/2016.” The claim was denied.
• January 2016. “Client alleges that her financial advisor told her that ‘B’ taxable bonds were the same as “A” tax free bonds. She is not happy with her investments and wants to know if the firm will do anything to help her.” The case was settled for $150,000.
• December 2015. “Client complains that her financial advisor was negligent in recommending the purchase of bonds which have since defaulted. Time frame is Feb 2009 to Apr 2014.” The customer sought damages in the amount of $450,000 and the case was closed without action.
• November 2015. “Customer claims that high yield bonds were purchased for his account without prior consultation. He requests that the firm buy back particular bonds he purchased between May 2013 and May 2014 at his original purchase price.” The customer sought $133,000, but the case was denied.
• November 2015. “Client complains of losses experienced in bonds which she does not feel were appropriate for a moderate investor. Time frame is 3/05 to 1/15.” The customer sought $140,000 in damages and was awarded $64,000.
• October 2012. “Claimants allege excessive trading of clients’ trust accounts, in period 2006 to 2010.” The customer sought $333,000 and was awarded $110,000.
• November 1995. “Claimants alleged that I induced them to purchase plaid clothing bonds using unspecified untrue statements and omissions of adverse material information. Claimants allege damages in excess of $1,000,000.00 as a result of their purchase.” The customer sought damages of $468,000 and was granted that amount.
• October 1995. “Alleged misrepresentation concerning purchases of plaid clothing bonds.” The customer was granted $50,000 in damages.
• September 1995. “Customer alleged that her 1993 purchase of $52,000 of plaid clothing bonds was unsuitable.” The customer was awarded $25,000 in damages.
• September 1995. “Customer alleged misrepresentation concerning plaid clothing bonds.” The customer was granted $107,259.25 in damages.

Erez Law represents investors in the United States for claims against RBC Capital Markets, LLC Financial Advisor Paul Blum, who is alleged to recommended a speculative, unsuitable and concentrated investment strategy of high risk “junk” oil and gas bonds tied to the energy sector.

A broker must have reasonable grounds for each recommendation made to investors considering such factors as the customer’s other securities holdings, financial situation, and risk tolerance. In addition, before a firm offers a security to its customers, the firm must conduct due diligence, investigating the facts surrounding the security, to confirm that it is suitable for any customer of the firm. The suitability of an investment for a particular individual is at the center of the investment process and one of the key duties owed by a firm and its broker to the customer. A firm may be held liable for its failure to recommend suitable investments to its customers.

In addition, 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, RBC Capital Markets, LLC may be liable for investment or other losses suffered by Blum’s customers.

At Erez Law, many of our clients come to us because of our specialization in Puerto Rico bonds. We have filed more than 200 FINRA arbitration cases against large brokerage firms, including UBS, Merrill Lynch, Santander Securities, Morgan Stanley, Oriental Financial Services, Popular Securities and others, holding these firms accountable for dishonest investment advisory practices, unsuitable recommendations, misrepresentation, and over-concentration in connection with Puerto Rico bonds and funds.

Erez Law can help you recover losses you suffered investments losses as a result of former RBC Capital Markets, LLC financial advisor Paul Blum regarding recommending unsuitable Puerto Rico bonds. If you were a client of RBC Capital Markets, LLC financial advisor Paul Blum and have experienced investment losses or financial irregularities, please call us at 888-840-1571 or complete our contact form. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies.