Are you a Wisconsin resident and were you sold U.S. Virgin Islands bonds by your Wells Fargo broker? If so, those losses you sustained with Wells Fargo may be recoverable through the Financial Industry Regulatory Authority (FINRA) arbitration process. We are securities attorneys based in Chicago and sue firms like Wells Fargo on a contingency fee basis because the firm may be liable for investment losses. If your Wells Fargo broker sold you these bonds, please call 312-332-4200 today to speak to an attorney for a no-cost, no-obligation consultation to find out how you can bring a claim against the firm.
Brokers have an ironclad obligation to only recommend and sell bonds that are suitable for investors, and the U.S. Virgin Islands bonds were high-risk and illiquid investments, which are not suitable for many investors. According to a recent Wall Street Journal article, the mutual fund with the highest percentage of Virgin Islands debt is made up largely of Wisconsin investors, because Wells Fargo Asset Management, which oversees the Wells Fargo Wisconsin Tax Free C Fund, is protecting itself from the situation by holding that that is insured or coming due within the next 18 months. More than 8% of its holdings is Virgin Islands debt. The bonds were recently downgraded further to junk bond status.
Much like Puerto Rico, the Virgin Islands are struggling with a declining population, declining tourism, high levels of debt and pension obligations. These debt problems were exacerbated after the 2008 market crash. And in 2012, the Hovensa oil refinery on St. Croix shut down. This was one of the territory’s biggest employers, employing over 2,000 people. Because of the drop in revenue, this caused the territory to increasingly rely on bond proceeds to pay operating costs, while contributing less to pension plans. Currently, there is $2.2 billion in debt obligations.