FMSBonds, formerly First Miami Securities, is again the subject of an investment fraud case. This time, the claim is that Paul Antevey, a financial advisor with FMSBonds, mislead investors by focusing excessively on low-rated bonds, including those of Frontier Communications (FTRCQ), rather than focusing on high-rated and lower-rated bonds in general.
The investors accounts exploded, causing the plaintiffs more than $1 million in damages, according to the FINRA claim. The investor plaintiffs were inexperienced investors who knew nothing about bonds, and financial Paul Antevey, who presented himself as a bond expert and touted the company as one of the country’s leading bond firms – trading companies in the late 1990 “s and early 2000” s – worked as a financial adviser. He promised the plaintiffs that they would put their money into a solid portfolio that was not exposed to unnecessary risk.
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Paul Antevey Allegedly Overconcentrated Frontier Communications Bonds
Instead, the financial advisor placed them in far too many junk bonds, many of which were rated BB- or lower, let alone high-yield, but not investment-grade. As a result, almost all of investors “net liquidity assets ended up in long-term” junk bonds, “which were probably only unwanted holdings that the company wanted to divest. Other unsuitable bonds were those of Cleveland Cliffs and Transocean, and some of them should never have been valued higher.
The FINRA claim alleges that the broker-dealer is now responsible for all investment losses related to Frontier Communications’ bonds. This would also include the cost of the issue and the brokerage firms that were the biggest sellers.
Frontier Communications Bond Losses
Frontier Communications filed for bankruptcy in March, leaving many investors and other creditors in the lurch, according to a Wall Street Journal report.
According to the allegation, FMSBonds failed to properly supervise the portfolios of the plaintiffs, while profiting from the fraudulent actions of the brokers. It is alleged that Paul Antevey took advantage of the plaintiff’s inexperience to find out why certain bonds, including Puerto Rico bonds, which failed when the market collapsed, performed poorly and took other inappropriate actions.
The claimant alleges that the Florida-based FMS Bonds has acquired a reputation for marketing less than desirable bonds. It has been the subject of numerous regulatory events, including customer disputes over municipal bonds and an investigation by the Securities and Exchange Commission.
In 2017, FINRA fined the broker-dealer $217K for influencing 170 client transactions in municipal securities without providing specific details. The company was also the subject of a bond fraud charge in Puerto Rico involving improper sales by its broker. Haselkorn & Thibaut (InvestmentFraudLawyers.com) offers free in case advice to investors who have suffered significant losses while working with FMS Bonds, including losses related to Frontier Communications Bonds. They have offices across the country and work with customers in the United States. Investors can call them at 888-628-5590.