Broker-Dealer Allegedly Misled Novice Investor And Placed Funds In Risky Junk Bonds
FMS Bonds, formerly called First Miami Securities, is the subject of yet another investor fraud lawsuit. This time it’s for misleading an inexperienced bond investor from the Dallas, Texas area and causing him to overconcentrate his portfolio with low rated, long-term “junk” bonds and other bad bonds, including those issued by Frontier Communications. The account eventually blew up, causing the claimant to suffer approximately $1M in losses.
Our Texas investor lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) are representing this investor in Financial Industry Regulatory Authority (FINRA) arbitration to recover these losses. The hearing will take place in the Dallas area.
Frontier Communications Bonds Made Up Sizable Portion of Claimant’s Investments
The claimant is an inexperienced investor who knew nothing about bonds. He’d never worked with a financial adviser until broker, Paul Antevey, who presented himself as a bond expert and touted his firm as a preferred bond broker-dealer with access to the best deals. Antevey promised the claimant that his money would be placed in a solid portfolio that would not be exposed to unnecessary risks. Other bonds that were unsuitable include those issued by Cleveland-Cliffs and Transocean.
Instead, the FMS Bonds broker placed way too many junk bonds, many of them ranked BB or lower and considered high-yield or non-investment grade that should never be overconcentrated in any portfolio let alone that of an unsophisticated investor.
As a result, nearly all of the investor’s liquid net worth ended up in long-term junk bonds, which likely was just unwanted inventory that the firm was trying to offload. This would go on to include Frontier Communications-issued bonds, of which this brokerage firm has been a big seller.
The broker-dealer is now the subject of investor complaints regarding investment losses related to Frontier Communications bonds. The telecommunications company filed for bankruptcy protection last month leaving many investors and other creditors in the lurch.
Broker Acted Negligently By Taking Advantage Of Inexperienced Investor
We believe that Paul Antevey took advantage of the claimant’s inexperience, coming up with excuses for why certain bonds, including Puerto Rico bonds that failed when the market for them collapsed several years ago, performed poorly and engaging in other unsuitable actions.
Meanwhile, the broker’s firm failed to properly supervise him or the claimant’s portfolio while benefiting from this broker’s fraudulent actions.
The claimant, who lost about $1M, is alleging the following in his complaint:
- Possible churning/excessive transactions
- Breach of fiduciary duty
- Misrepresentations and omissions
- Gross lack of supervision
Brokerage Firm Has Been Under Scrutiny for Bond Sales for Years
FMS Bonds, which is based out of Florida, has developed a reputation for marketing less “desirable” bonds. It has been the subject of numerous regulatory events, including customer disputes, over municipal bonds.
In 2017, FINRA fined the broker-dealer $217K for impacting about 170 customer transactions involving municipal securities without making certain disclosures. The firm also has been the subject of Puerto Rico bond fraud claims involving unsuitable sales made by its brokers.
Get Legal Advice From Securities Fraud Attorneys
SSEK Law Firm is offering a free case consultation to any investor who suffered significant losses while working with Paul Antevey or any other FMS Bonds financial representative, including those whose losses involved Frontier Communications bonds.
We work with clients throughout the US and have offices all over the country. Contact SSEK Law Firm today.