FINRA Issues Bond Liquidity Investor Alert
The past several years have seen a volatile bond market in which many
investors have sustained unanticipated bond principal valuation losses. While a bond is typically
designed to afford investors the full value of their original investment at the time of their maturity,
volatility in the bond in the financial markets has seen many investors unable to liquidate their bonds
prior to maturity without sustaining significant losses. Typically, when interest rates rise, bond
prices fall. This is something that can cause a sellout in the bond market, which depresses bond prices
and makes it more difficult to sell a bond – especially bonds with a longer maturity date. Other
factors, such as credit scores, can cause the same problem.
Most small investors don’t realize that the vast majority of bonds trade
through firms that buy and sell their bonds for the firm’s own account and profit. Notwithstanding the
implementation of the TRACE system and development of electronic bond trading platforms, there are still
inefficiencies in the bond markets. Inefficiencies in the bond markets may tend to work to the disfavor
of small investors, particularly in times of bond market volatility.
We offer free initial consultation to bond investors who feel they may
have been victimized in the bond markets. Please contact our offices at (518) 426-7700 to
arrange a free initial consultation.
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