WASHINGTON – Federal regulators have fined 13 brokerage firms, including Charles Schwab, JPMorgan Securities and TD Ameritrade, accusing them of failing to protect retail investors in sales of high-risk bonds issued by Puerto Rico's debt-strapped government.
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The Securities and Exchange Commission announced the penalties Monday. The amounts are small, from $54,000 to $130,000.
But the action is significant because it is the SEC's first under a rule establishing the smallest amount of municipal bonds that brokerages can sell an investor in a single transaction. Retail investors usually buy securities in smaller amounts, so the rule is designed to ensure that high-risk "junk" bonds are sold only to investors who can purchase bigger quantities and shoulder greater risk.
The SEC said it found sales below the $100,000 minimum for the Puerto Rico bonds.