Puerto Rico Investment Fraud Lawyers & FINRA Attorneys

Investment fraud lawyers serving Puerto Rico investors

Puerto Rico’s investment fraud history is defined by the Puerto Rico closed-end bond fund crisis — one of the most geographically concentrated investment fraud events in modern American financial history. Between roughly 2008 and 2015, UBS Financial Services of Puerto Rico and other broker-dealers sold Puerto Rico investors highly concentrated positions in leveraged closed-end funds invested in Puerto Rico municipal bonds. When Puerto Rico’s fiscal crisis caused municipal bond values to collapse, these funds — which had been sold as conservative income investments appropriate for Puerto Rico investors’ retirement savings — declined catastrophically, causing billions of dollars in losses to thousands of island investors.

The FINRA arbitration claims arising from the Puerto Rico bond fund crisis established critical precedents for concentrated Puerto Rico municipal bond exposure, leveraged fund misrepresentation, and the suitability obligations owed to investors whose entire retirement savings were placed in products whose underlying assets were concentrated in the same jurisdiction whose economic crisis caused the losses. FINRA awarded billions in damages to Puerto Rico investors across thousands of individual arbitration claims. While the initial crisis wave has largely moved through the FINRA arbitration system, Puerto Rico investors continue to face broker misconduct in the context of the island’s ongoing fiscal recovery and economic restructuring.

Puerto Rico’s economy — including healthcare, manufacturing, tourism, government employment, and a significant pharmaceutical and biotechnology sector — creates an ongoing investor community whose retirement savings and professional investment accounts are managed through national broker-dealer networks. The Puerto Rico government employee retirement system’s underfunding has created specific vulnerability for government workers seeking to supplement inadequate public pension coverage through private investment accounts. Puerto Rico investors have full access to FINRA arbitration on identical terms to investors in the 50 states.

Investment fraud and misconduct claims we handle

• Unsuitable investment recommendations: recommendations inconsistent with the investor’s risk tolerance, financial situation, or objectives violate FINRA Rule 2111 and Regulation Best Interest.
• Broker fraud and misrepresentation: material misstatements and omissions in connection with investment recommendations are actionable under federal securities law and FINRA rules.
• Unauthorized trading: executing transactions without prior client authorization violates the account agreement and FINRA rules.
• Churning and excessive trading: excessive trading to generate commissions at the investor’s expense is a suitability violation.
• Overconcentration: failing to maintain adequate diversification in a single security, sector, or product.
• Variable annuity and product fraud: unsuitable recommendations of variable annuities, non-traded REITs, structured notes, leveraged ETFs, and private placements.
• Elder financial fraud: exploitation of elderly investors subject to enhanced liability under state and federal statutes.
• Failure to supervise: brokerage firms bear independent liability under FINRA Rule 3110 when supervisory failures allow broker misconduct to cause investor harm.

Suitability under Puerto Rico Securities Law

A violation occurs when a broker or adviser recommends unsuitable investments, failing to consider the client’s unique circumstances. Such actions can lead to significant financial losses for the client and potential legal liability for the adviser. Puerto Rico investment fraud lawyers at Bakhtiari & Harrison represent investors. The Puerto Rico suitability requirement is integral to protecting investors from inappropriate and potentially harmful investment strategies.

Puerto Rico requires investment advisers to act in the best interests of their clients. Under the Puerto Rico Uniform Securities Act, advisers must not mislead or deceive clients regarding investment suitability. Ensuring recommendations align with clients’ financial goals and risk tolerance is critical.

Unauthorized Trading under Puerto Rico Securities Law

The Puerto Rico Uniform Securities Act also prohibits unauthorized trading. Brokers must secure client consent before executing any trades. Violations can result in criminal penalties, fines, and the potential loss of licensure.

Misrepresentations Under Puerto Rico Securities Law

Similarly, under the Puerto Rico Uniform Securities Act, it is unlawful for any person to misrepresent or omit material facts in connection with the sale of securities. This includes false statements about the value or safety of an investment. Puerto Rico investment fraud lawyers at Bakhtiari & Harrison represent investors. Violations can lead to severe penalties, including fines and imprisonment.

Failure to Disclose Material Information under Puerto Rico Law

Puerto Rico’s Securities Act also mandates full disclosure of all material information to investors. Failure to disclose can result in criminal and civil penalties, aiming to protect investors from fraud and deception.

Unfair Business Advantage under Puerto Rico Securities Laws

In Puerto Rico, similar protections are provided under the Puerto Rico Deceptive Trade Practices Act, which prohibits deceptive acts and practices in the conduct of business, including securities trading. Puerto Rico investment fraud lawyers at Bakhtiari & Harrison represent investors. This includes insider trading, market manipulation, and other unfair practices.

Why choose Bakhtiari & Harrison as your Puerto Rico investment fraud lawyers

• $250 million+ recovered. Four decades of results for investors in FINRA arbitration and securities litigation nationwide.
• Former FINRA NAMC Chairman. Ryan Bakhtiari served as Chairman of the FINRA National Arbitration and Mediation Committee from 2013 to 2017.
• Former Morgan Stanley in-house counsel. David Harrison spent years as Morgan Stanley Dean Witter in-house counsel and began his career as a Series 7-licensed representative at Shearson Lehman Brothers.
• Dedicated experience in FINRA arbitration. Selecting counsel with specific FINRA arbitration expertise is the single most important decision an investor claimant makes. Bakhtiari & Harrison’s practice is dedicated to investor-side FINRA arbitration and securities litigation.
• FINRA hearings near you. FINRA arbitration hearings are held at the venue nearest the claimant’s residence.
• Contingency fee representation. No recovery, no fee. Initial consultations are free.

Frequently asked questions — Puerto Rico investment fraud lawyers

Do Puerto Rico investors have access to FINRA arbitration?

Yes. Puerto Rico is a FINRA jurisdiction and Puerto Rico investors have full access to FINRA arbitration on identical terms to investors in the 50 states. FINRA maintains a hearing location in San Juan — hearings are held at the venue nearest the claimant’s residence. Puerto Rico investors can bring FINRA arbitration claims against any FINRA-registered broker-dealer regardless of where the firm is headquartered.

What is the deadline to file a FINRA arbitration claim in Puerto Rico?

FINRA Rule 12206 requires claims to be filed within six years of the events giving rise to the dispute. Puerto Rico state law claims may have different limitations periods. For Puerto Rico bond fund claims, the timeline of the losses and when investors knew or should have known of the misconduct is a critical factual issue. Contact Bakhtiari & Harrison promptly — do not assume time remains.

Does the arbitration clause in my brokerage account prevent me from bringing a claim?

No. The arbitration clause determines the forum — FINRA arbitration rather than court — but does not limit your substantive legal rights or recoverable damages. FINRA arbitration has produced billions in awards to Puerto Rico investors for bond fund losses alone.

What damages can Puerto Rico investors recover in FINRA arbitration?

Prevailing investors recover compensatory damages — the difference between what a suitable investment would have returned and what you actually received — plus consequential damages and prejudgment interest. In Puerto Rico bond fund cases and other cases involving fraud or willful misconduct, FINRA panels can award punitive damages. Bakhtiari & Harrison evaluates the full range of recoverable damages in every initial case review.

Contact our Puerto Rico investment fraud lawyers — free consultation

Contact Bakhtiari & Harrison for a free, confidential consultation. Our FINRA attorneys evaluate every potential Puerto Rico investor claim at no charge. Contact us today.

Investor cases are handled on a contingency fee basis — no recovery, no fee.

Call: (800) 382-7969 | Contact Us