The financial situation in Puerto Rico continues to get worse and the fallout will extend well beyond just direct debt issued by the island. Many bond funds invested heavily in Puerto Rican debt because of Puerto Rico’s triple-exemption status (which means the income on its bonds are exempt from taxes at the federal, state and local levels). According to reports, the following is a chart of the municipal bond funds with the greatest exposure:
| Fund | Ticker | Category | Puerto Rican exposure | Total fund assets |
|---|---|---|---|---|
| Franklin Double Tax-Free Income A | FPRTX | High Yield Muni | 44.72% | $143.57M |
| Oppenheimer Rochester® MD Municipal A | ORMDX | Muni Single State Long | 42.6% | 48.65M |
| Oppenheimer Rochester® VA Municipal A | ORVAX | Muni Single State Long | 39.29% | 95.15M |
| Oppenheimer Rochester® Fund Municipals A | RMUNX | Muni New York Long | 20.1% | 5.6B |
| Oppenheimer Rochester® Ltd Term Muni A | OPITX | High Yield Muni | 19.32% | 2.0B |
| Oppenheimer Rochester® AZ Municipal A | ORAZX | Muni Single State Long | 19.11% | 43.69M |
| Oppenheimer Rochester® NJ Municipal A | ONJAX | Muni New Jersey | 17.7% | 396M |
| Oppenheimer Rochester® Michigan Muni A | ORMIX | Muni Single State Long | 17.29% | 43.08M |
| Oppenheimer Rochester® LtdTerm NY MunisA | LTNYX | Muni Single State Short | 16.76% | 2.7B |
| Oppenheimer Rochester® AMT-Free NY MuniA | OPNYX | Muni New York Long | 16.29% | 1.1B |
The problem is so widespread that it was even discussed in a recent Last Week Tonight episode with John Oliver (https://www.youtube.com/watch?v=Tt-mpuR_QHQ). Oliver’s main thesis (humorously conveyed of course) is how none of these funds would on their face appear to have anything to do with Puerto Rico. For example, most novice investors would likely assume that the Oppenheimer Rochester Maryland fund would invest in Maryland and wouldn’t have more than 42% of its assets in Puerto Rican debt.
The White Law Group continues to investigate claims that brokerage firms failed to adequately disclose these concentrated positions before selling these municipal bond funds.
Before recommending an investment, financial advisors have a fiduciary duty to adequately disclose the risks involved in the investment and to perform the necessary due diligence to determine whether the investment is suitable for the investor. To the extent that an advisor or brokerage firm fails to perform adequate due diligence or makes unsuitable investment recommendations, the firm may be held liable for any resulting losses in a FINRA arbitration claim.
To determine whether you may be able to recover investment losses incurred in a municipal bond fund over-exposed to Puerto Rican debt, please contact The White Law Group at 1-888-637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. For more information on the firm, visit www.WhiteSecuritiesLaw.com.
Tags: Franklin Double Tax-Free Income class action, Franklin Double Tax-Free Income investigation, Franklin Double Tax-Free Income lawsuit, Franklin Double Tax-Free Income Puerto Rico, Oppenheimer Rochester class action, Oppenheimer Rochester investigation, Oppenheimer Rochester litigation, Oppenheimer Rochester losses, Oppenheimer Rochester performance, Oppenheimer Rochester Puerto Rico, Oppenheimer Rochester tax benefits Last modified: May 4, 2016