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due to mismanagement and not even know it.

FINRA punishes firm from inappropriate supervision of securities

With the financial issues that Puerto Rico has experienced over the past few years, foreign investment has been an important part of the commonwealth’s plan for recovery. However, investment has not been without significant risks, and a great deal of focus has been on preventing fraudulent schemes from affecting unwitting investors.

Because of this, there has been more enforcement actions involving Puerto Rican investments. In fact, the Financial Industry Regulatory Authority (FINRA) announced this month that it has ordered Santander Securities LLC to pay more than $4 million in restitution to customers who were persuaded into purchasing Puerto Rican Municipal Bonds (PRMBs). The firm was also ordered to pay back $121,000 in restitution and was fined an additional $2 million for supervisory mistakes associated with the bonds. 

Essentially, FINRA found that Santander’s product risk evaluation tools did not accurately reflect the potential troubles investors could encounter with PMBRs. The company also did not have additional controls to determine if accounts with significant concentration of PMBRs were evaluated to determine if such holdings were appropriate for the customer. This was especially troublesome given how Moody’s downgraded some PMBRs to one level above junk status.

The report provided by did not detail whether any investors lost money, but the story is indicative of the risks involved with foreign investments, and the actions that can be taken against irresponsible or negligent firms that do not have appropriate risk evaluation tools to protect their clients.

If you have questions about recovering money lost through inappropriate investments or unsupervised securities, an experienced attorney can help. 

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