Broker-dealer folds

http://blogs.ocregister.com/mortgage/archives/2007/06/brookstreet_troubles.html

 

Brookstreet closes down, 100 laid off

(Updated version)
Brookstreet Securities Corp., an Irvine broker-dealer, has shut its doors, laid off 100 local employees and liquidated its assets because it is unable to meet margin calls on complex securities called collateralized mortgage obligations, the company's spokeswoman Julie Mains told Register reporter John Gittelsohn today.

An email sent to employees summed up the situation as a "Disaster."

"It's heartbreaking," Mains said.

She said the company went from $16 million in capital Friday to being $3 million underwater Wednesday because its clearing firm, National Financial Services, sold the securities, which had lost value as Wall Street confidence in Bear Stearns & Co's hedge funds of mortgage-backed securities collapsed .

A spokesman for National Financial Services said it's not his company's fault that Brookstreet ran out of capital.

Mains said some of Brookstreet's customers lost their entire investment and that the National Association of Securities Dealers ordered the company to liquidate its remaining accounts. She said Brookstreet clients should try to find another broker-dealer to take over their accounts.

That is a horrible story. I feel so bad for those that went with them.