Have you suffered losses investing in Puerto Rico COFINA Bonds? If so, the attorneys at The White Law Group may be able to help you recover your losses by filing a FINRA Arbitration against the brokerage firm that you the investment.
GO Bonds VS. COFINA Bonds
Puerto Rico COFINA bonds or Puerto Rico Urgent Interest Fund Corporation Bonds, are attached to Puerto Rico's sales tax. COFINA is a corporation that is owned and controlled by the Puerto Rican government. When it issues debt, the funds that will be used for repayment comes directly from sales tax revenue.
General obligation bonds or GO bonds are not tied to any specific funding mechanisms. Instead, those bonds are backed by the full faith and credit of the Puerto Rican government as well as the island's constitution. This is the main feature that distinguishes COFINA bonds from GO bonds.
The island's 'Sales and Use Tax', which is the specific tax that supplies revenue for COFINA bondholders, charges a 7 percent fee on many different sales and transactions that are conducted in Puerto Rico.
Litigation & Bankruptcy
In May, Puerto Rico and its federal financial oversight board got bombarded with lawsuits from COFINA bond holders, GO bondholders and bond insurer Ambac Assurance Corp.
COFINA bondholders allege that the island's debt-cutting plans violate the U.S. Constitution. The GO bondholders are demanding payment on $242.5 million of debt defaulted upon since July, and damages and interest of more than $102 million.
Ambac, which insures $2.2 billion of Puerto Rican bonds, filed four lawsuits.
This onslaught of litigation led to the largest government bankruptcy since Detroit, with close to $123 Billion in debt.
COFINA Bondholders Future is on Hold.
Now, a recent decision by Justice Laura Taylor Swain, the New York federal judge overseeing the massive bankruptcy process, ordered that the $16 million interest payment due to COFINA bondholders on June 1 be held by the trustee until a decision is made as to which bondholder group has the legal right to that money.
Judge Swain's decision to freeze the payments is disastrous news for COFINA bondholders, many who are relying on interest payments to survive.
Puerto Rico Warns it may take sales taxes from bondholders.
According to reports, unless the dispute is resolved soon, Puerto Rico will likely need to fund government operations using the sales-tax revenue claimed by these warring factions.
The federal oversight board asked a judge to let the board appoint two independent agents to help litigate the dispute between the bondholders. In court papers filed Saturday, lawyers for the oversight board said those agents should take over the fight currently being waged between GO bondholders and COFINA bondholders.
The U.S. Bankruptcy Court in San Juan will decide who has control over $400 million of funds held by the sales-tax bond trustee. If the court rules that Puerto Rico doesn't have claim to any sales-tax revenue, then the island may be required to borrow sales-tax revenue after Nov. 1 from the island's sales-tax agency, according to court documents.
The White Law Group is investigating the liability that brokerage firms may have for improperly selling Puerto Rico COFINA Bonds such as the following offerings:
Sales Tax Revenue Bonds Senior Series 2011C
Sales Tax Revenue Bonds Senior Series 2011D
Sales Tax Revenue Bonds First Subordinate Series 2011B
Sales Tax Revenue Bonds First Subordinate Series 2011A
Sale Tax Revenue Bonds First Subordinate Series 2010D
Sale Tax Revenue Bonds First Subordinate Series 2010E
Sale Tax Revenue Bonds First Subordinate Series 2010C
Sale Tax Revenue Bonds First Subordinate Series 2010A
Sales Tax Revenue Bonds First Subordinate 2009B
Sales Tax Revenue Bonds First Subordinate Series 2009A
Sales Tax Revenue Bonds First Subordinate 2009C
Sales Tax Revenue Bonds Senior Series 2009C
Sales Tax Revenue Bonds Series 2008A
Sales Tax Revenue Bonds Series 2008B
Sales Tax Revenue Bonds Series 2008C
Sales Tax Revenue Bonds Series 2007C
Sales Tax Revenue Bonds Series 2007B
Sales Tax Revenue Bonds Series 2007A
Brokerage firms are required to perform adequate due diligence on any investment they recommend and to adequately disclose the risks of any investment. Additionally, brokerage firms are required to ensure that all investment recommendations made are suitable in light of the client's age, investment experience, investment objectives, net worth, and income.
If it can be demonstrated that a brokerage firm failed to perform adequate due diligence, to properly disclose the risks, or recommended an investment unsuitably, the firm may be held responsible for any resulting losses in a FINRA arbitration claim.
If you suffered losses invested in Puerto Rico COFINA bonds and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at 888-637-5510 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. The firm represents investors throughout the country in FINRA arbitration claims against their brokerage firm.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.