Washington, DCThe Financial Industry Regulatory Authority (FINRA) has ordered more fines be paid out linked to the sale of Puerto Rico bonds. The fines were handed out after allegations were made that certain financial institutions failed to properly supervise employees trading bonds in Puerto Rico and allegedly downplayed the risks associated with the bonds. Additionally, FINRA has handed out other fines linked to stockbroker fraud in its stockbroker arbitration hearings.
According to The Wall Street Journal (10/13/15), FINRA fined a unit of Spain’s Banco Santander $2 million for its actions in the sale of Puerto Rican municipal bonds, including failing to supervise employee trading. Santander has also agreed to pay around $4.3 million in restitution to customers who lost money as a result of Santander’s lack of oversight. In agreeing to the settlement, Santander did not admit to wrongdoing in its actions.
Santander is not the first financial institution to pay settlements linked to Puerto Rico bond funds. In September, the U.S. Securities and Exchange Commission (SEC) announced it and FINRA had reached an agreement with UBS Financial Services Incorporated of Puerto Rico (UBSPR) to pay $34 million for failing to supervise a broker whose customers invested in UBSPR-affiliated mutual funds while using money that was borrowed from a UBSPR-affiliated bank. As a result, UBSPR will pay $34 million to U.S. regulators and restitution to clients affected by the Puerto Rico bond funds.