Erez Law is currently investigating Hennion & Walsh, Inc. financial advisor Joseph Rodriguez (CRD# 3093506) regarding losses sustained from investments in unsuitable Puerto Rico bonds. Rodriguez has been registered with Hennion & Walsh, Inc. in Parsippany, New Jersey since 1998.
Recently, a former customer, a married couple from New Jersey, filed a FINRA arbitration alleging that Rodriguez overconcentrated their investment portfolio in high risk and unsuitable Puerto Rico bonds. The lawsuit alleges negligence, breach of fiduciary duty, negligent supervision and breach of contract. The couple’s investment objectives were safe investments that would preserve capital and create income to sustain themselves throughout retirement. It is alleged that Rodriguez recommended the couple purchase more than $300,000 worth of unsuitable Puerto Rico bonds, causing the customers to see losses of $175,000, as well as future income they would have generated if their money was invested properly. The customers’ bonds were liquidated in October 2017, causing the couple to see out of pocket damages of $250,000. It is alleged that Rodriguez recommended the customers invest in the following Puerto Rico bonds:
- Puerto Rico Commonwealth Refunding Public Improvement Series A, CUSIP 74514LNC7
- Puerto Rico Infrastructure Ports Authority Series B, CUSIP 74528UAP6
- Puerto Rico Infrastructure Ports Authority Series B, CUSIP 74528UAL5
- Puerto Rico Public Bldgs Authority Revenue Refunding Government Facilities Series P, CUSIP 745235L58
- Puerto Rico Public Bldgs Authority Revenue Guaranteed Unrefunded Balance Government Facilities I, CUSIP 745235D65
- Puerto Rico Public Bldgs Authority Revenue Guaranteed Refunding Government Facilities M 3 Convertible 9/18/08, CUSIP 745235K34
Puerto Rico suffers from long-term financial and economic deficiencies that rendered its credit increasingly more speculative. The deterioration of Puerto Rico’s financial condition culminated in its debt being downgraded to junk status or speculative (below investment grade). For the past several years, Puerto Rico has been struggling with compounding debt and economic decline. As a result, the value of Puerto Rico’s municipal tax-free bonds has considerably fallen. Since September 2013, when the steep decline in Puerto Rico bond values began, investors holding these bonds have suffered massive losses. In May 2017, Puerto Rico filed for bankruptcy protection from creditors in what is being described as the largest municipal bankruptcy filing in history.
Rodriguez has been the subject of four additional customer complaints between 2004 and 2017, according to his CRD report:
- June 2017. “Claimants, licensed securities brokers, allege that certain investment grade municipal bonds purchased in their non-discretionary/self directed accounts between 2009 and 2012 were unsuitable.” The customer is seeking $125,000 in damages and the case is currently pending.
- May 2016. “Unsuitable recommendation Approximately 2013 and 2014.” The customer sought $250,000 in damages and the case was settled for $60,000.
- October 2015. “unsuitable recommendation.” The customer sought $56,390 in damages and the case was settled for $25,000.
- July 2004. “Overcharging commissions.” The case was settled for $29,000.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Hennion & Walsh, Inc. may be liable for investment or other losses suffered by Rodriguez’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.