FINRA Sales Practice Violations

Unsuitable Investment Advice

UBS Financial Services of Puerto Rico, Santander Securities, Popular Securities, Oriental Financial and Merrill Lynch (“brokerage firms”), as member firms of the Financial Industry Regulatory Authority (FINRA), are required to have a “reasonable basis” to believe that a recommended investment in non-traded, closed-end Puerto Rico Bond Funds and Puerto Rico Municipal Bonds is suitable for Puerto Rico customers based on their investment profile. The FINRA rule requires “reasonable diligence” to ascertain information concerning a customer’s investment profile, including:

  • customer age;
  • employment status;
  • tax status;
  • investment objectives;
  • financial situation and needs;
  • investment experience;
  • investment time horizon;
  • investment sophistication;
  • other investments;
  • liquidity needs;
  • risk tolerance; and
  • any other information disclosed by customer in connection with recommendation.

Brokerage firms and its financial advisors are subject to the FINRA “suitability” rules which contemplates the “facts and circumstance” of a particular customer recommendation. In this instance, brokerage firms and its financial advisors must have a firm understanding of both the recommended non-traded, closed-end Puerto Rico Bond Funds and its Puerto Rico customers. Failure to understand both the investment vehicle and the customer is considered a violation of the FINRA rules and regulations.

The customer investment profile includes a list information that should be considered when a suitability determination about an investment recommendation. To strengthen the rules that require the suitability analysis, brokerage firms and its financial advisors are required to indicate with “specificity” the reasonable basis for why a particular customer investment profile factor is not relevant, in order to be relieved of the obligation to seek the required information.

Klayman & Toskes, P.A. and the Carlo Law Offices are dedicated to the rights of Puerto Rico investors. Our legal team can help you determine what steps can be taken to protect your investor rights. Puerto Rico investors who suffered losses as a result of unsuitable investment advice related to investments in non-traded, closed-end Puerto Rico Bond Funds and Puerto Rico Municipal Bonds may be able recover their losses in a FINRA arbitration claim for damages.

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Visit our Website for the Recovery of UBS Puerto Rico Bond Fund Losses

For more information on how to start a claim, or to find out if you have a meritorious cause of action, please contact our law firm, toll free, at (787) 268-6444, for a free consultation.

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