On October 9, 2013, the office of Secretary of the Commonwealth of Massachusetts, William Galvin, announced it sent inquiry letter to Fidelity's FMR Co. Inc.; OppenheimerFunds, a unit of Massachusetts Mutual Life Insurance Co.; and UBS Financial Services Inc. Securities regulators have begun making inquiries regarding the sale of Puerto Rican municipal debt obligations to investors in the state.
In a recent article from InvestmentNews, Bruce Kelly writes that the value of Puerto Rican municipal bonds declined in September. Puerto Rico has been facing a fiscal crisis, with economic stagnation and huge pension obligations. Several investors bought the individual municipal bonds or bond funds using margin accounts and as the values the bonds decreased, margins were called, forcing investors to sell more bonds or municipal bond funds.
According to the statement, the Massachusetts Securities Division has begun an inquiry to determine the extent of Massachusetts investors' exposures to the risks of Puerto Rican bonds. They are also looking into whether investors were adequately made aware of the risks associated with their investments and whether the bonds were properly priced. Many Massachusetts state-specific municipal bond funds have a high concentration of Puerto Rican debt, because of the advantageous yields and tax benefits.
Call Soreide Law Group at (888) 760-6552 for a free consultation on how you may be able to recover your investment losses.
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