• July 21, 2018
• Sandlapper Securities
• Puerto Rico
• Puerto Rico Bonds
• Santander bond funds
• Santander Closed-End Funds
• Santander Securities

The Wolper Law Firm, P.A. is currently investigating claims against Mariondy Fernandez, a former Financial Advisor at Santander Securities in Dorchester, Massachusetts.  Mariondy Fernandez has been in the securities industry since the 2001.

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), Mariondy Fernandez has eighteen (18) customer complaints, principally for his improper recommendation of Puerto Rico municipal bonds and closed-end funds.  The complaints collectively allege millions of dollars in damages for, among other things, “unsuitable” investment recommendations, “fraud,” “misrepresentation,” “negligence” and “breach of fiduciary duty.”

https://brokercheck.finra.org/individual/summary/2391134#disclosuresSection

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.

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.

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives.  Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients.  To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

If you or someone you know was a customer of Mariondy Fernandez or Santander Securities, and you experienced investment losses, please contact the Wolper Law Firm, P.A. at 800.931.8452 or by email at mwolper@wolperlawfirm.com to discuss your specific situation and the legal options available.  The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration.

Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities.  Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters.  Simply put, he knows how the other side evaluates cases, which gives you a competitive advantage.