If you are invested in a U.S. municipal bond mutual fund, odds are they’re exposed to Puerto Rico’s deteriorating financial situation. But because the slow-motion train wreck has been chugging along for several years, with the U.S. commonwealth’s government publicly stating its intention to not pay its bond debt, the weekend’s news that Puerto Rico defaulted on its debt wasn’t a surprise.
This means the heightened risk of loss for municipal bond funds has been known for some time. Like most investments, those with higher risks pay higher commissions to the brokers that sell them. Recommending such municipal bond funds while failing to disclose this risk or to recommend such funds to someone who is trying to avoid risk is a form of fraud.
Some municipal bond investments have led to broker misappropriation. That has been alleged in a customer arbitration suit concerning Merrill Lynch broker Christopher C. Hellman. FINRA, the Financial Industry Regulatory Authority, investigated the matter and Mr. Hellman failed to respond to the charge.
You may be entitled to recovery of your losses if you have been recommended such funds. Please call 1-866-817-0201.