Securities Arbitration Lawyer Blog
Former Santander Securities broker Hortensia Llavat has twenty-three pending customer complaints on her CRD, including three customer complaints filed in 2020 claiming over $250,000 in losses.
The claims allege that recommendations to invest in Puerto Rico municipal bonds and closed-end funds were unsuitable and led to overconcentration of the accounts in these securities. Further, the claims allege that Ms. Llavat and Santander misrepresented the safety of the investments.
Ms. Llavat (CRD#: 1010318) has been in the securities industry for 39 years. She was registered with Santander Securities between 2000 and 2018. She has been registered with Stonecrest Capital Markets, Inc. since March 2018.
Ms. Llavat has been the subject of ninety-five customer complaints, most of which allege the same types of violations outlined in the pending cases: unsuitable investment recommendations, overconcentration, and misrepresentation related to Puerto Rico municipal bonds and closed-end funds.
Iorio Altamirano LLP es un bufete de abogados de arbitraje de valores con experiencia representando a inversionistas en todo el país ante el foro de pleitos de arbitraje de FINRA. Iorio Altamirano LLP tiene experiencia en pleitos de arbitraje sobre bonos municipales de Puerto Rico y fondos de bonos de Puerto Rico. Puede conocer más sobre nuestro bufete aquí.
Santander Securities LLC
FINRA sanctioned Santander Securities LLC $6.4 million for supervisory failures related to sales of Puerto Rican bonds in October 2015.
At the time, Santander was ordered to pay nearly $4.3 million in restitution to certain customers who were solicited to purchase Puerto Rican municipal bonds. FINRA also censured and fined Santander $2 million for supervisory failures related to sales of Puerto Rican municipal bonds and closed-end funds, and for failing to reasonably supervise employee trading in its Puerto Rico branch office.
Santander was also ordered to pay restitution of $121,000 and make rescission offers to buy back the securities sold to certain customers impacted by Santander’s failure to supervise employee trading.
The Santander Securities office in Puerto Rico closed to the public in May 2018.
Puerto Rico Bond Crisis
The Puerto Rico municipal debt market crashed at the end of the summer of 2013, following Detroit’s bankruptcy filing that July. Overconcentration in Puerto Rico securities and lack of diversification across markets and credit risks has caused millions of dollars in losses to investors since.
Puerto Rico’s municipal bond and closed-end fund crisis has also led to an unprecedented number of investor claims before FINRA.
Puerto Rico is barred from filing for traditional bankruptcy. It has no access to US bankruptcy laws. The Puerto Rico Oversight, Management, and Economic Stability Act, or PROMESA, was passed by Congress on June 9, 2016, to address Puerto Rico’s financial crisis. At the time of PROMESA filing on May 3, 2017, Puerto Rico was $72 billion in debt.
Puerto Rico closed-end funds sold to individual investors were not regulated by the Securities and Exchange Commission (“SEC”). Under Section 6(a) of the Investment Company Act of 1940, broker-dealers selling mutual funds in Puerto Rico were not required to comply with significant investor protections afforded to Americans on the mainland.
Congress closed the loophole in May 2018 via amendment through the Economic Growth, Regulatory Relief, and Consumer Protection Act.
Nevertheless, investors are still reeling from the losses in their investments and have faced additional downgrades by credit agencies:
- July 2016: Puerto Rico defaulted on its general obligation (GO) bond debt. S&P downgraded Puerto Rico’s credit to a “D” rating.
- July 2017: Fitch Ratings downgraded COFINA bonds to D (in default and lowest grade rated by this agency).
- October 2017: Moody’s downgraded Puerto Rico’s GO, COFINA, and other debt citing a negative outlook.
Our Firm
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.
If you have suffered investment losses, contact New York securities arbitration lawyer Jorge Altamirano of Iorio Altamirano LLP at jorge@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a bilingual law firm, fluent in both English and Spanish.