Massachusetts’ chief securities regulator William F. Galvin is beginning an inquiry into the impact of Puerto Rican debt on Massachusetts mutual fund investors. Specifically, Galvin wants to know the extent of Massachusetts’ investors’ risk exposure, if investors were made aware of the risks, and when firms that marketed and sold the funds became aware of the risks associated with Puerto Rican debt.
The state also plans to review whether the bonds were properly priced since July 2012.
Galvin has sent letters of inquiry to Fidelity Investments, OppenheimerFunds Inc., a unit of Massachusetts Mutual Life Insurance Co., and UBS Financial Services.
Puerto Rican municipal debt obligations are popular for their yield and their tax-exempt status. However, Puerto Rico is nearly insolvent today, making the risks of such investments extremely high.