I own bonds yet my investments have plummeted in value. Can I recover those bond losses?
All investments must be suitable for the investor in light of age, liquidity needs, risk tolerance, investment objectives and all market conditions. Moreover, the risks and features of an investment must be adequately explained, including what could happen in a down market such as what we are experiencing with the Coronavirus.
Bond losses thus can be recovered if those bonds were not suitable, the risks were not adequately explained, or if any of the following occurred:
The corporate bonds were lower credit quality, junk or "high yield" bonds
The municipal bonds or state-issued bonds were "revenue" bonds (also known as "limited obligation"), thereby not backed by the full faith and credit of the issuer
Those bonds were the great majority of the investment portfolio as the portfolio was not "asset allocated" among stocks, cash and other investments
The bonds were not diversified among issuers (corporate, municipal and state), were not diversified among industry, and were not diversified in duration /length
The bonds were part of an ETF bond fund or bond mutual fund and the risks of investing in those bonds that way – instead of simply owning individual bonds myself -- was not adequately explained to me
The "bonds" actually were "reverse convertible notes", "reverse convertible bonds", or "leveraged loans" (also known as "floating rate loan funds"), which are highly complex, risky and unsuitable for most investors
If you or someone you know incurred losses with bonds and any of the above happened, we recommend contacting us for a no-charge consultation. Most investors file claims in FINRA arbitration to recover their losses, and most claims are brought on a "contingency fee" basis.
