Investment Fraud Lawyers Protecting Puerto Rico Investors
The Securities Fraud Lawyers at Greco & Greco, P.C. regularly represent Puerto Rico residents in disputes with their financial advisors and securities salespersons, involving claims of suitability, violations of FINRA Rules, negligence, fraud, violations of Regulation Best Interest (SEC Reg BI) misrepresentation, ponzi schemes, broker theft, breach of fiduciary duty, professional malpractice, and other claims. Please contact Scott Greco for a free attorney consultation about your case. We serve clients from all areas of Puerto Rico, including San Juan, Bayamon, Carolina, Ponce, Arecibo, Caguas, Guaynabo, Trujillo Alto, Mayagüez, and Fajardo.
Decades of FINRA Arbitration Experience
If an individual investor has a dispute with a FINRA brokerage firm or stock broker, he/she most likely will have to arbitrate through FINRA’s Dispute Resolution system. FINRA Arbitration holds arbitration hearings in one Puerto Rico city, San Juan. Hearings are typically held in a conference room at a resort in Condado.
W. Scott Greco has extensive experience representing Puerto Rico investors against their financial advisors. He was the first attorney to obtain an arbitration award for his Puerto Rico client relating to the 2013 Puerto Rico bond and closed end fund (CEF) crash. After that award, Mr. Greco has represented dozens of Puerto Rico clients in similar FINRA arbitrations, with tens of millions of dollars of recoveries through arbitration hearings and settlements.
Although settlements are required to be kept confidential, read more here about the multiple FINRA arbitration awards for W. Scott Greco’s Puerto Rico clients over the past decade involving Puerto Rico bonds and bond funds (CEFs).
Contingency Fees for Harmed Puerto Rico Investors
We understand that many of our clients cannot afford to hire an attorney because they have lost a large portion of their life savings. Our attorneys regularly represent harmed investors charging only a contingency fee. This means that our clients do not have to pay any attorneys fees up front, and only pay us out of monies recovered in your case.
Puerto Rico Securities Regulator and Puerto Rico Securities Act
The Puerto Rico Office of the Commissioner of Financial Institutions regulates the securities industry in Puerto Rico. Its website provides a means for making a complaint against a financial institution in Puerto Rico and links to Puerto Rico securities regulations and laws.
The Puerto Rico Securities Act provides for civil liability for the commission of securities fraud in the sale of securities (including untrue statements of material fact and omissions of material fact). The Act provides for rescission (or damages if the investor no longer owns the security), reasonable attorneys fees, and interest.
Common Legal Claims by investors against their financial advisors in Puerto Rico
- Suitability/Reg BI. Prior to recommending the purchase of specific investments or a specific investment strategy to a customer, a stock broker in Puerto Rico is required to determine that the investments are suitable to that particular investor. A suitability determination is based upon many different factors such as age, investment objectives, risk tolerance, employment situation, needs, income, assets, and investment experience. The suitability rule was superseded in 2020 by the SEC’s Regulation Best Interest (Reg BI) which requires that recommendations of securities and securities strategies be in the best interest of the customer.
- Churning. Churning occurs when a broker exercises control over an account and allows the broker’s interest in making commissions to override the investor’s interests in the account. When a broker makes a buy or sell recommendation for an account, that broker should have the investor’s best interests based on their investment objectives in mind. If the broker makes excessive buy and sell recommendations for the purposes of generating commissions for the broker by each buy and sell, that broker is engaged in churning the account. Excessive turnover in the assets of the account and/or a high cost to equity percentage are often a sign of churning.
- Unauthorized Trading. Generally, an investor can have two kinds of an account, non-discretionary and discretionary. In a typical non-discretionary account, the broker must consult with and obtain the consent of the customer prior to making a trade in the account. Unauthorized trading occurs when a broker makes trades in a non-discretionary account without the consent of the customer.
- Securities Fraud. Most of the claims in this list are subsets of securities fraud which is employing a device, scheme, or artifice to defraud, or obtaining money by means of untrue statements of material facts and failure to state material facts in violation of Puerto Rico’s Securities laws or federal law (Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5). If a broker makes false statements to an investor or fails to advise the investor of certain important facts, the investor may be able to recover losses incurred resulting from this fraud.
- Margin Fraud. Margin trading involves borrowing money from the brokerage firm to purchase securities greater in value than the equity in an investor’s account. Due to the risky nature of trading on the margin, disputes with brokers often arise as a result of significant losses. If a broker trades on the margin without the knowledge or consent of the investor, the investor may be able to recover the losses resulting from the fraud.
- Ponzi Scheme Investment Scams. Ponzi schemes generally involve promises of high returns by salespersons over short periods of time, but in reality result in stealing from Peter to pay Paul. Because returns to investors in ponzi schemes are often paid out of new investment monies from new investors, the scheme will ultimately fall apart when the new investors dry up, leaving all investors often holding a worthless investment.
- Failure to Supervise Broker. FINRA firms in Puerto Rico have a duty to supervise their registered brokers, and their failure to do so may form the basis of various legal claims against them. FINRA Rule 3110 states: Each member shall establish and maintain a system to supervise the activities of each registered representative, registered principal, and other associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA Rules. Final responsibility for proper supervision shall rest with the member.
- Breach of Fiduciary Duty. Financial Advisors in Puerto Rico owe their customers the highest fiduciary duty pursuant to PR Regulations.
Free Attorney Consultation
Please contact our Puerto Rico securities fraud lawyers for a free consultation if you believe your financial advisor broker may be liable under one of the above claims, or for other wrongful conduct.