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How Can I Sue Santander Securities For My Puerto Rico Bond Or Closed End Fund Losses?

The Wolper Law Firm is investigating claims against Santander Securities, LLC regarding the sale of Puerto Rico municipal bonds and proprietary Puerto Rico closed-end funds.  More than 200 cases have been filed against Santander Securities, alleging improper sales practices with regard to these investments.

Santander Securities and its Financial Advisors aggressively recommended that customers purchase Puerto Rico municipal bonds and Santander Securities bond funds, touting the tax advantages.  In most instances, very few, if any, investment alternatives outside of Puerto Rico were offered to 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.

Among the bonds sold by Santander Securities to its customers are:

  • Employee Retirement System (ERS or POB)
  • Puerto Rico Sales Tax Financing Authority (COFINA)
  • Puerto Rico General Obligation Bonds (GO)
  • Puerto Rico Electric and Power Authority (PREPA)
  • Puerto Rico Aqueduct and Sewer Authority (PRASA)
  • Puerto Rico Housing Authority
  • Puerto Rico Public Building Authority (PBA)

These bond issuers have defaulted.  While ERS and COFINA have made payments into a trust account for the benefit of bondholders, arguments are pending before the Puerto Rico courts regarding whether these payments are subject to a “claw back” by the Puerto Rican government to meet its debt obligations.  Many Santander Securities Financial Advisors either refused or neglected to review the offering documents for Puerto Rico municipal bonds to better understand the risk factors of these bonds.  Santander Securities, as an institution, also liquidated its own positions in Puerto Rico bonds prior to the 2013 crash.  In other words, Santander Securities took the risk off their own books but left it in the accounts of its brokerage customers.

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.

The following Santander bond funds are under investigation:

  • First Puerto Rico AAA Fixed Income Fund
  • First Puerto Rico AAA Target Maturity Fund I
  • First Puerto Rico AAA Target Maturity Fund II
  • First Puerto Rico Target Maturity Income Opportunities Fund
  • First Puerto Rico Target Maturity Income Opportunities Fund I
  • First Puerto Rico Target Maturity Income Opportunities Fund II
  • First Puerto Rico Tax Advantage Target Maturity Fund I
  • First Puerto Rico Tax Advantaged Target Maturity Fund II
  • First Puerto Rico Tax-Exempt Target Maturity Fund II
  • First Puerto Rico Tax-Exempt Target Maturity Fund III
  • First Puerto Rico Tax-Exempt Target Maturity Fund IV
  • First Puerto Rico Tax-Exempt Target Maturity Fund V
  • First Puerto Rico Tax Exempt Target Maturity Fund VII
  • First Puerto Rico Tax-Exempt Fund
  • First Puerto Rico Tax-Exempt Fund II
  • First Puerto Rico Daily Liquidity Fund

Have Securities Regulators Fined Santander?

In late 2015, the Financial Industry Regulatory Authority (FINRA) sanctioned Santander Securities and ordered it to pay $6.4 million in restitution.  While Santander Securities neither admitted nor denied the factual findings of FINRA, the implication is clear.

Why You Should Choose The Wolper Law Firm To Represent You

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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