What are Junk Bonds?

Bond investments that are both high-risk and high-reward are given the nickname “junk bonds.” The outcome of investing in them is uncertain, but if they perform well, the investment pays off and often in a short period of time. Thus, junk bonds are mainly recommended to those who have experience with investing and know what they entail.

With the high-risk and high-reward possibilities, junk bonds work well for some, but not all. Many brokers will advertise this type of investment by only highlighting the significant return involved and failing to mention the risk. Doing so is a violation of Financial Industry Regulatory Authority (FINRA) rules, as well as both state and federal regulation laws.

If you are not a seasoned investor and did not receive a full risk assessment prior to investing in this type of bond, you need an experienced attorney willing to seek arbitration. The junk bond attorneys at Oakes & Fosher, LLC in St. Louis, MO will fight for you in your case of stock broker misconduct.

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Rating Bonds

Each bond is rated based upon the financial outlook and credit of the issuer. In order for a bank to issue a bond, they must be of investment grade. This means that the bond rating agency believes an investor can receive ample dividends when the investment reaches maturity. The agencies that rate bonds in North America include Moody’s, Standard & Poor’s, and Fitch.

Junk bonds, however, have a low investment grade. Therefore, much greater risk is involved, as there is not guaranteed payback of dividends. As an investor, the chances are higher that you would lose significant funds. If you have lost a majority of your invested money from a bond, the junk bond attorneys of Oakes & Fosher are experienced in guiding you and fighting for your rights.

How Do I Know if I Have a Junk Bond?

As with any investment, certain characteristics define junk bonds’ nature. Below is a list of common criteria that can be used to determine whether a bond is “junk”:

  • The investment involves a country that has a failed or failing economy.
  • The company issuing the bond does not recover financially and/or goes bankrupt.
  • The bond purchased defaults or does not recover value.
  • The returns from the bond are higher than normal.

Moving Forward

If you speculate that you might have been ill-advised, the first step in recovering your losses is to contact a lawyer with experience in cases of investment fraud. Our attorneys have extensive experience with securities arbitration claims, as well as a deep understanding of the industry. We will help you gather relevant documentation about the suspicious investment, as well as broker records.

It’s the financial advisor’s responsibility to ensure you, as the investor, are aware of the whole truth. When you get in touch with us, we will assess your case against them and determine the best strategy for encompassing your losses. The attorneys at Oakes & Fosher are familiar with the ins and outs of securities misconduct litigation and are willing to provide representation for investors that have experienced stock broker misconduct. We fight for victims of junk bond scams and seek recompense for damages.

Receive Help from Junk Bond Attorneys

If you have invested in junk bonds, or suspect a broker-dealer advised you to invest in bonds that ended up being “junk,” you should seek legal action. The junk bond attorneys at Oakes & Fosher can help you recover your lost investments through arbitration processes under FINRA.

We have over 20 years of experience representing individual investors in disputes with stockbrokers and large brokerage firms. In addition, we have helped over 1,000 investors nationwide recover investment losses of $50 million through Private Arbitration. Contact us today to receive a 100% free and confidential consultation.

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