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Naturally every investor wants to earn the highest return possible on an investment. However, high-yield junk bonds come with high risks in the best of circumstances, when an improvement in bond rating is anticipated, but not certain. Furthermore, promises of high earnings within a short time period make junk bonds an attractive vehicle for fraud.

Zamansky LLC is a premier Wall Street securities litigation law firm dedicated to advocating for the rights of investors. Our team understands the securities market and the laws that affect investors. Our investment fraud lawyers help investors recover damages resulting from unsuitable investments, negligence, fraud and breach of fiduciary duties associated with non-investment grade bonds.

If your rights have been harmed on by the financial services industry, Call us at (212) 742-1414.

Red Flags of an Unsuitable Investment of a Non-Investment Grade Bond

Junk bonds are not always a bad investment. These high-yield products can deliver substantial returns for investors who have a high level of risk tolerance. However, junk bonds may be unsuitable for investors with a low risk threshold because of the risk of default or substantial devaluation.

Investors who rely upon their brokers for sound advice may not realize they are heavily invested in high-risk bonds until they sustain substantial losses. Indications that a bond is categorized as a junk bond include:

  • The bond has a non-investment grade rating: Rating by the three rating companies — Moody’s, Standard & Poor’s (S&P) and Fitch — of B or Ba or lower indicates the bond is non-investment grade.
  • Investment is in energy, commodities or another volatile industry: Energy and commodities industries are notoriously volatile and can lead to wild fluctuations in investment returns.
  • Investment is in Puerto Rico: Puerto Rican and other government bonds are rapidly declining in value.
  • The bond promises high returns quickly: High-yield bonds also tend to be high risk.

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Red Flags of a Junk Bond Investment Scam

Junk bond fraud targets investors attracted to short-term high returns. While a legitimate non-investment grade bond may deliver on that promise, a junk bond fraud eventually collapses. Often, junk bond fraud is not an investment mechanism at all, but rather a Ponzi scheme or a bond with no chance of recovery.

Red flags that the investment is fraudulent include:

  • Promises of yields substantially above historic rates of return
  • Confusing descriptions of investment strategy and methodology
  • Lack of information about the broker or operator, usually through an Internet website or email
  • Foreign location of the operator, which may not be properly registered with SEC or licensed by FINRA
  • Requirement of an e-currency transaction
  • New recruit incentives, which is often a sign of a Ponzi scheme

Contact Our Securities Law Firm to Pursue Junk Bond Loss Recovery

Zamansky LLC handles cases involving junk bond fraud, unsuitable investments, broker negligence, breach of fiduciary duty and related claims in order to recover losses sustained by investors. Contact an investment fraud lawyer at our firm today for a risk-free, confidential evaluation.

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“Jake Zamasky and his colleagues represented me in a FINRA arbitration case against a large multinational bank and succeeded in obtaining an award for the full amount of my investment losses. I would highly recommend the Zamansky firm for their experience in securities litigation, their level of detailed research and case preparation, and their ability to effectively fight for what’s right.”

Richard R.

“Throughout my entire case, Jake Zamansky was incredibly responsive and spent time walking me through each step of the process. He is professional and worked with my challenging schedule, even meeting with me nights and on weekends. He knew exactly which turn to take when it came to my case and yet was respectful of any decisions I wanted to make resulting in a positive outcome.”

Donald A.

“Jake Zamansky and his firm represented me in a FINRA arbitration case to recover investment losses. Jake and his team were very professional and worked very hard preparing for trial and then reaching a substantial settlement of our case. I would highly recommend them.”

William E.

“Jake Zamansky represented me in a FINRA arbitration case which allowed me to recover a substantial portion of investment losses. He is truly an expert in this space and I would highly recommend him to those investors who may have been been a victim of investment fraud.”

Chris K.

“Jake and his team did a great job communicating with me throughout the process of my lawsuit. I would recommend him to anyone looking to sue UBS for unethical practices.”

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