Puerto Rican Bond Crisis Places Oppenheimer Funds at Risk

According to Investment News, along with the much publicized-UBS Puerto Rican Bond Funds, the municipal bond funds of OppenheimerFunds appear to have also been hit by Puerto Rico’s financial problems. The Oppenheimer Rochester Virginia Municipal Bond Fund (ORVAX), valued at $125 million, is down by over 15%, which places it last in the lineup of single-state municipal bond funds.

Such losses could prove an unpleasant surprise for investors in Virginia. The media publication blames the fund’s poor performance on the huge bet it placed on the Puerto Rico bond funds, which have not done very well in the wider municipal bond market because of the territory’s financial issues and the bonds’ low rating.

Investment research firm Morningstar Inc. says that the single-state municipal bond funds with over 25% of assets in the beleaguered bonds are The Oppenheimer Rochester North Carolina, Massachusetts, Arizona, and Maryland funds, with each fund down through last week by over 11%. A median single-state municipal bond fund usually holds no more than 2.38% of assets in the bonds from Puerto Rico.

The Oppenheimer bond fund losses come five years after the Oppenheimer Core Bond Fund (OPIGX) got into huge trouble over CDS and mortgage-related debt. The fund dropped 35% that year. The SEC went on to file securities charges against the funds over issuing misleading statements to shareholders. The firm settled the charges for $35 million.

Additionally, customers of UBS (UBS), Banco Santander (SAN.MC), and Banco Popular, and other brokerage firms in Puerto Rico that that purchased municipal bond funds tied to Puerto Rico continue to meet with securities law firms to determine if they have legal claims. UBS alone may have packaged and sold over $10 billion of highly leveraged Puerto Rican municipal bonds and bond funds to individual investors. Its brokers there are accused of suggesting to clients that they borrow money from the firm in credit lines and margin accounts to purchase the bonds and bond funds.

Puerto Rico Bond Fund Cases
Our Puerto Rico bond fund lawyers are looking into claims for investors that purchased these municipal bonds and bond funds from Banco Santander, UBS, and Banco Popular. Additionally, our attorneys are also looking into losses involving Oppenheimer bond funds and the Franklin Double Tax-Free Income A (ticker: FPRTX). There are also other brokerage firms that may have sold the Puerto Rico municipal bonds to customers.

The Puerto Rico debt and bond problems are proving to be a huge problem, with some investors, including senior citizens and retirees, claiming massive losses. You want to work with a securities law firm has the experience to handle this type of bond fund case.

Contact Shepherd Smith Edwards and Kantas, LTD LLP today to receive your free case assessment. We are speaking with investors in Puerto Rico and on the mainland. Hablamos Español.

Storm Of Puerto Rican Bonds Hits U.S Mainland, Forbes, October 15, 2013

Oppenheimer’s risky bond bets backfire — again, Investment News, October 11, 2013


More Blog Posts:

Massachusetts Regulator Makes Puerto Rican Municipal Debt-Related Inquiries to UBS, FIdelity, and Oppenheimer, Stockbroker Fraud Blog, October 14, 2013

Puerto Rico Municipal Bonds, Stockbroker Fraud Blog, October 9, 2013

Muni Bond Funds Hit by Puerto Rico’s Debt Problems, Institutional Investor Securities Blog, October 9, 2013