Massachusetts Regulator Makes Puerto Rican Municipal Debt-Related Inquiries to UBS, FIdelity, and Oppenheimer

The Massachusetts Securities Division has written inquiry letters to UBS Financial Services (UBS), Massachusetts Mutual Life Insurance Co.’s Oppenheimer Funds, and Fidelity’s FMR Co. Inc. about the sales of Puerto Rican municipal debt obligations that were made investors in the state.

The regulator wants to know exactly to what extent these customers were exposed to the bonds’ risks, whether they were adequately warned of the risks involved, and if the bonds were correctly priced. The debt obligations were usually sold via mutual funds.

The bond funds at issue are heavily invested in Puerto Rican-backed municipal bonds and many were very highly leveraged. Due to tax and benefits and favorable yields, a lot of state-specific municipal bond funds in Massachusetts, and other states, are heavily concentrated in Puerto Rican debt. For example, close to 17% of the Oppenheimer Rochester Massachusetts Municipal Fund’s assets ($69M) are in Puerto Rico debt. These bonds are often low rated (BBB or lower) and carry significant risks.

Puerto Rico Bond Claims
Puerto Rico bonds have been dropping in price over the territory’s beleaguered economy and huge debt of $70 billion. Massachusetts securities regulator William Galvin noted that the US territory verging on “insolvency” and a lot of its debt obligations are at or close to junk rating. He says that the risks involved are “disproportionately high.”

If you hold any of these funds, or other investments tied to Puerto Rican debt, please contact our securities fraud firm to explore your legal options. Shepherd Smith Edwards and Kantas, LTD LLP represents investors throughout the U.S. and its territories. Our Puerto Rico bond lawyers are looking at claims of customers that purchased bonds and municipal securities through UBS, Banco Popular, and Banco Santander (SAN.MC). UBS alone has sold $10 billion in the Puerto Rico bonds in the last 10 years.



Galvin begins examination of Puerto Rican muni debt obligations, Investment News, October 9, 2013

U.S. funds investigated over Puerto Rico bond strategy, Reuters, October 9, 2013

William Galvin, Secretary of the Commonwealth of Massachusetts

More Blog Posts:
US Treasury Doesn’t Intend to Provide Aid Over Puerto Rico Bond Fund Debacle, Says Spokesperson, Stockbroker Fraud Blog, October 10, 2013

Puerto Rico Municipal Bonds, Stockbroker Fraud Blog, October 9, 2013
Muni Bond Funds Hit by Puerto Rico’s Debt Problems, Institutional Investor Securities Blog, October 9, 2013

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