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BREAKING NEWS—El Neuvo Dia Reports That Santander Securities Was Sanctioned $1Million By The Puerto Rico Office Of Financial Regulation In A Previously Undisclosed Settlement

The Wolper Law Firm has previously written about Santander Securities woes in Puerto Rico,  The Spanish based brokerage firm had the second largest footprint on the island of Puerto Rico before closing its brokerage operations on the island in late 2017.

On July 30, 2018, El Nuevo Dia, the largest distributed newspaper in Puerto Rico, reported that in 2017, Santander Securities was sanctioned by the Puerto Rico Office of the Commissioner of Financial Institutions, known as the OCFI.  The sanction was for $1 million based on its sale of concentrated portfolios of Puerto Rico municipal bonds and closed-end funds to retail customers.


Puerto Rico’s economic struggles are well documented.  The government debt is more than $70 billion, principally comprised of principal and income payments owed to bond holders in Puerto Rico.  Between 2015 and 2016, virtually all of the eighteen (18) issuers defaulted, leaving bondholders holding the bag.

Santander Securities exacerbated what was already a significant economic problem by recommending to its customers that they purchase Puerto Rico municipal bonds notwithstanding the inevitable collapse of the Puerto Rico economy and financial markets.  Credit ratings agencies, like S&P, Moddy’s & Fitch, all rated Puerto Rico debt one notch above “junk” and had the credit on negative watch.  In many instances, customers had 100% of their accounts and a substantial percentage of their overall net worth invested in Puerto Rico municipal bonds.  This is a violation of the basic principles of investing, particularly considering the negative outlook held by analysts.

In addition, Santander Securities issued its own proprietary closed-end funds, which it filled with Puerto Rico municipal bonds.  When the Puerto Rico bond market crashed, so too did the value of the bond funds.  Because the closed-end funds used a high degree of leverage, the opportunity for the bond funds to return par value to shareholders is virtually non-existent.  The bond funds are now illiquid, meaning they cannot be sold, precluding Santander Securities customers from accessing their money.

The closed-end funds are high commission investments that had speculative characteristics.  The Santander Securities closed-end funds were concentrated in Puerto Rico municipal bonds.  In addition, the Santander Securities closed-end funds utilized up to 50% margin in order to purchase more bonds and enhance the investment return.   When the Puerto Rico bond market crash occurred, the Santander Securities bond funds experienced margin calls and were forced to liquidate Puerto Rico municipal bonds within the funds at depressed prices.  This created a cascading effect of losses to shareholders of the Santander Securities bond funds.

This settlement further underscores the absence of adequate institutional controls to monitor customer accounts at Santander Securities.

Matt Wolper, the Managing Principal of the Wolper Law Firm, has been immersed in the Puerto Rico bond crisis since the crash occurred in 2013.  Prior to forming the Wolper Law Firm, Matt Wolper was a partner with a national law firm handling securities litigation cases in Puerto Rico on behalf of UBS Financial Services of Puerto Rico and Merrill Lynch, Pierce, Fenner & Smith, Inc of Puerto Rico.  He has handled hundreds of Puerto Rico bond and closed-end fund cases and has intimate knowledge of the crisis, government efforts and the sales practices among Financial Advisors at brokerage firms in Puerto Rico.  He has also handled multiple Puerto Rico arbitration claims through the trial phase.

Put simply, he has an unmatched command of the legal landscape in Puerto Rico relative to Puerto Rico municipal bonds and closed-end funds and is intimately familiar with how Puerto Rico brokerage firms evaluate these cases.  Matt Wolper now devotes his efforts to the representation of aggrieved investors in Puerto Rico against Santander Securities and Popular Securities.  Put his experience and his inside perspective on your side.

For a free consultation and case assessment, contact the Wolper Law Firm at 800.931.8452 or mwolper@


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