SEC fines 13 brokerages over retail sales of 'junk' bonds issued by Puerto Rican government

Markets Associated Press

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.