Jeffrey Pederson is licensed in the federal courts for the Northern and Central Districts of Illinois, and has aided investors nationwide in the recovery of investment losses, such as muni bond losses. Please call 1-866-817-0201 for a free and confidential consultation with an attorney. We are currently investigating the potential recovery for losses in muni bonds issued by both Illinois and Chicago.
The risks of these bonds were foreseeable for years. Financial professionals have a duty to only recommend investments that are consistent with the level of risk the investor both wants and can withstand. Those either looking for retirement income or non-speculative investments may possibly have a claim if recommended either the Illinois or Chicago bonds.
Illinois bonds have long been at risk since the state has not had an approved budget in over two years. The state currently has over $14 billion in unpaid bills. This comes in the wake of similar financial problems in the territory of Puerto Rico. In Puerto Rico, financial problems led to bankruptcy and caused thousands of investors to lose their life savings when they were led to believe that they were invested in “safe” municipal bonds.
Chicago is also on the verge of bankruptcy. For years, the return on Chicago bonds were known to be too good to be true. In 2014, the city’s debt was downgraded to junk status given the massive debts owed to four of its pension funds. This led to a widespread selloff in Chicago muni bonds.
Chicago Mayor Rahm Emanuel, in response, instituted a record property tax increase for city residents. Bills in 2016 will be, on average, 13% higher. The increased ‘revenue’ to the city is being used to help fix the four pension funds’ large underfunded status.
The Mayor’s plan to fix the $20 billion public pension shortfall was ruled unconstitutional. The restructuring plan was passed by the state legislature in 2014, but was struck down due to the state’s constitution, which has a clause that forbids the reduction of public pensions.