Frontier Communication Bonds Investors May Be Able To Recover Losses Through Broker Fraud Claims

Following Bankruptcy Proceedings, Bondholders Turn to FINRA Arbitration 

Now that Frontier Communications Corp. has filed for bankruptcy protection, investors who bought the company’s bonds may be grappling with how to recover their losses. 

At Shepherd Smith Edwards and Kantas (SSEK Law Firm), our bond fraud lawyers are here to tell you that you may have grounds for a Financial Industry Regulatory Authority (FINRA) arbitration claim against the broker that sold you these investments. 

Frontier Communications bonds were primarily sold by FMSBonds, Inc., the brokerage firm that was formerly called First Miami Securities.  

Frontier Communications Was Struggling with Billions in Debt 

Frontier Communications is a telecommunications company. It used to be called Citizens Utilities Company and before that Citizen Communications Company. Frontier Communications offers local and long-distance telephone service, as well as digital TV, Internet, and computer tech support to residents and businesses in about 29 US states. 

However, NASDAQ has since delisted Frontier, which was mired in $17.5B debt that was mostly a result of bad acquisitions and the decline in landline telephone communications. The move came just days after Frontier filed for Chapter 11 bankruptcy protection on April 14, 2020, around which time the company reported about $8B in unsecured debt. A month before the bankruptcy filing, Frontier missed paying coupon bond payments that were due.

FMSBonds Under Scrutiny For The Unsuitable Selling Of These Bonds

Now, FMSBonds, the main brokerage firm that sold Frontier Communications bonds out of its inventory, has come under scrutiny over concerns that its brokers may have marketed and sold this investment to customers even though they were unsuitable for their portfolio, risk tolerance level, or investment goals. 

Unfortunately, broker-dealers have been known to get rid of “unwanted” inventory, providing incentives (such as markups that are similar to added commissions) to their registered representatives to make these sales sweeter even when they are not in an investor’s best interests. 

Also, there are growing concerns that brokers who sold Frontier Communications bonds may not have fully apprised customers of the risks they were taking on. 

Broker-dealers have a duty to properly supervise their brokers so that no unsuitable investment recommendations are made and that these registered representatives have done all they can to ensure that customers understand not just the investments they are buying but also the risks involved. 

When investments that are inappropriate or too risky are sold to an investor, that is when losses that could and should have been avoided happen.

Frontier Communications Bond Fraud Claims 

A number of Frontier Communications bonds investors have been institutional investors, including Franklin Resources, Elliott Management Group, and Golden Tree Asset Management. However, retail investors, including retirees, were also sold these bonds. The majority of Frontier Communications bondholders are believed to be holding unsecured debt.

Broker-dealers, such as FMSBonds, that sold Frontier Communications bonds can be held liable for damages if one of their registered representatives engages in any type of stockbroker misconduct, negligence, or carelessness that led to investors’ losses. Failure to do proper due diligence into these bonds prior to selling them may also be grounds for a claim. 

Contact our stockbroker fraud attorneys at SSEK Law Firm about your Frontier Communications investment losses. We can help you determine whether you have grounds for a FINRA arbitration claim for damages. Your initial consultation with us is a free, no-obligation session.

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