Municipal Bonds

Municipalities’ Inability to Pay Bond Interest Places Investors in a Precarious Position

Published on: December 14, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Seeking Greater Yield and Safety, Muni Bond Customers Encounter Defaults

Despite the fact that the coronavirus has taken a toll on city and state finances, this isn’t stopping investors from buying municipal debt in a bid for greater yield and more safety than the markets can provide at this time. Unfortunately, because many municipalities don’t have the money to pay interest on the bonds, these muni bonds are defaulting. This is bad news for investors.

If you suffered losses from the municipal bonds that your broker recommended to you, you may have grounds for an investor claim to recover your losses. Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) represents municipal bond fraud investors nationwide. We can help you explore your legal options.

Ex-Next Financial Broker Charles Doraine is Barred Following Puerto Rico Bond Fraud Allegations

Published on: May 4, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Doraine Refused To Cooperate In FINRA’s Investigation

The Financial Industry Regulatory Authority (FINRA) has barred former Next Financial broker, Charles Doraine after he refused to give testimony in the self-regulatory organization’s (SRO’s) probe into allegations that he unsuitably recommended Puerto Rico bonds to customers.

Already, Doraine has been the subject of investor claims accusing him of overconcentrating customer accounts with these municipal bonds and engaging in short-term trading.

Kansas Settles SEC Charges Over Allegations it Misled Investors about Risks in Muni Bond Offerings Totaling $273 Million

Published on: August 11, 2014 | by Shepherd Smith Edwards & Kantas, LLP

The U.S. State of Kansas has agreed to settle U.S. Securities and Exchange Commission fraud charges accusing it of failing to disclose in offering documents that the Kansas Public Employees Retirement System (KPERS), its pension system, was very underfunded. The regulator says that this established a repayment risk for bond investors. At issue were eight bond offerings valued collectively at $273 million.

According to the regulator’s order, the bond offers were issued via the Kansas Development Finance Authority (KDFA). Not only did the bond offering documents purportedly fail to disclose KPERS’ unfunded liability but also the paperwork did not describe what effect this could have on payments. The SEC said these poor disclosures stemmed from inadequate communications and procedures between KDFA and the state’s Department of Administration, which let the former know what data should have gone into the offering materials.

As a result, said the SEC Enforcement Division’s Municipal Securities and Public Pensions Unit chief LeeAnn Ghazil Gaunt, Kansas gave investors were given an “incomplete” picture of the state’s finances and its potential ability to pay back the bonds (because of other stresses on its budget). The state has since put into place new procedures and policies to make sure that the appropriate disclosures about pension liabilities are disclosed in offering documents.