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Did Joel Farnsworth Sell You Puerto Rican Electric Power Authority Bonds?
By: Soreide Law Group PLLC
The Claimants are part of a family trust established by their parents. The parents had been associated with WEDBUSH broker, Joel D Farnsworth, for many years.
On or about 2020, WEDBUSH broker, Joel Dale Farnsworth, began to speculate on margin almost strictly in Puerto Rico Electric Power Authority bonds or "PREPA" bonds. The lawsuit alleges that when the Claimants questioned Joel D Farnsworth about what he was doing, he allegedly said that they would receive $1.40 for every dollar invested which included 40 to 50 cents of tax-free unpaid interest. The lawsuit alleges that the Claimants' accounts became so concentrated in Puerto Rico bonds that Joel D Farnsworth told the Claimants that he required them to change the objectives of the accounts to "aggressive growth" which was allegedly in violation of the terms of the trust on file with WEDBUSH. The lawsuit states that in all the accounts there was approximately $4,000,000 in non-rated Puerto Rico bonds with over approximately $2,000,000 bought on margin. The concentrations in the accounts were as high as almost 80% in Puerto Rican bonds. On or about June of 2023 the bonds defaulted wiping out their value. The lawsuit alleges that the Claimants put their trust into the family's longtime advisor and alleges Joel D Farnsworth never discussed the downside risk or how he may have added risk by the excessive use of margin. The lawsuit alleges that the Respondent allowed their broker to construct an overly concentrated portfolio in high-risk Puerto Rican Electric bonds on margin hoping that a favorable restructuring was going to happen with no real legitimate basis other than rumor and speculation.
The lawsuit alleges that WEDBUSH and their representative's actions have caused Claimants out of pocket damages of approximately $4,200,000.00. The allegations are, negligence, breach of fiduciary duty and negligent supervision.
According to FINRA's BrokerCheck, available to the public on FINRA's website, Joel D Farnsworth, has been in the securities industry for 33 years and has been with 7 firms. He has two disclosures, 1 "Customer Dispute," and 1 "Financial."
Puerto Rico's debt woes were not built overnight, but took a decade to develop. Since approximately 2007, Puerto Rico has been issuing new debt to pay off existing debts. In 2013, the New York Times reported that Puerto Rico's 3.7 million residents have accumulated an $87 billion debt, approximately $23,000 of debt per resident. Puerto Rico debt as a percentage of GDP has steadily climbed over the past ten years, making any investment into Puerto Rico bonds increasingly risky, wildly speculative and arbitrage on a potential favorable debt restructuring which never came to fruition. Since the late summer of 2013, the value of Puerto Rico municipal debt has dramatically declined. In addition, Puerto Rico's population is rapidly declining and consistent double-digit unemployment has caused the debt burden to be shouldered by a decreasing and poorer population.
Soreide Law Group has filed many lawsuits involving Puerto Rican Bond losses. If WEDBUSH SECURITIES and/or Joel D Farnsworth, or your own broker recommended Puerto Rican Bonds and you have suffered significant investment losses call Soreide Law Group and speak to an experienced securities lawyer at no cost regarding the possible recovery of your investment losses through a FINRA arbitration at: 888-760-6552.
Soreide Law Group represents our clients nationwide before FINRA on a contingency fee basis, no fee to you if no recovery. https://www.securitieslawyer.com