Santander Securities LLC has notified its Puerto Rico clients by letter that its San Juan branch will shutter its doors to the public on May 25. Santander Securities (SAN) is Banco Santander’s investment division. The move is part of the investment wing’s plan to move to a service-only model rather than its model that involves offering investment advice and soliciting sales. A scaled down staff will stay on at the branch after it closes.
Santander Securities in Puerto Rico has come under close scrutiny over the last five years. It is one of the investment firms that came under fire beginning in 2013 when Puerto Rico bonds and bond funds saw a steep drop in value and tens of thousands of investors sustained huge investment losses. Many of these investors should never have even purchased such volatile securities, which were always too risky for their portfolios and not in line with their investment goals. Yet Santander Securities brokers, as well as brokers from UBS Puerto Rico (UBS-PR), Banco Popular, and other investment firms, pushed them on clients, often in very high concentrations.
According to Bloomberg, between late 2012 and 2013, Santander Securities marketed and sold more than $280 million in Puerto Rico closed-end funds and municipal bonds, even as it shed its own holdings of these same securities. In 2015, the investment bank resolved allegations brought by the Financial Industry Regulatory Authority (FINRA) accusing the firm of deficiencies involving its structured product business, including its handling of reverse-convertible securities sales to retail customers in Puerto Rico.
For many of these investors, the securities were not suitable for them. To settle the civil case, Santander consented to pay more than $7 million to investors that were harmed and suffered investment losses, as well as a $2M fine. The year before, in 2014, Santander Securities’ Puerto Rico offices saw a drop in operations after Puerto Rico government-issued bonds were downgraded to junk rating.
Santander Securities first announced to its Puerto Rico clients and the public that it was changing business models late last year. It has reportedly been helping its existing clients decide what to do with their investment accounts at the firm. Many have already moved their accounts to other financial providers. Puerto Rico clients who continue to have accounts at Santander Securities after the San Juan branch closes will see their accounts moved to Santander Investments Direct in Boston.
Santander Securities Puerto Rico Bond Fraud Cases
To date, thousands of investors have filed their Puerto Rico bond fraud cases against brokerage firms and their brokers to try and recoup their investment losses. Investors that were harmed include retail investors, small business owners, investors who invested in funds holding Puerto Rico securities, and institutional clients.
Shepherd Smith Edwards and Kantas, LTD LLP has been representing investors on the island and the mainland in their Puerto Rico securities cases, including claims brought against Santander Securities and other broker-dealers. Contact us today to speak to one of our Santander Securities Puerto Rico Securities fraud lawyers during a free, no obligation case consultation.
More Blog Posts from SSEK Law Firm:
Investors Continue to Pursue Puerto Rico Bond Fraud Recovery From Santander Securities, Stockbroker Fraud Blog, May 22, 2017
FINRA Panel Orders UBS to Pay $204K in Puerto Rico Bond Fraud Claim, Stockbroker Fraud Blog, March 22, 2018
Hedge Funds Get Rid of Puerto Rico General Obligation Bonds After Hurricane Maria, Stockbroker Fraud Blog, November 22, 2017