Shepherd Smith Edwards & Kantas LTD LLP Law Firm: Claims v. Brookstreet Securities
(Click here for this and other stories about Brookstreet Securities)
Brookstreet Securities Class Action Alert!
Individual claims have recently been filed by Shepherd Smith Edwards & Kantas LTD LLP and steps have been taken to bring a class action against Brookstreet Securities and other defendants. The claims and potential class action are related to Brookstreet's apparent improper use of margin, unauthorized trading and other wrongdoing regarding CMO's in its customers' accounts. (Info on CMO's)
Reportedly, transactions simply appeared in client accounts, margin calls ensued, accounts were then liquidated and clients may now face claims that they owe debts to Brookstreet and its clearing firm. In other cases, clients beleived they were invested in safe, even government guaranteed, investments and were shocked to later discover their investments have been sold off to pay margin debt. If you or someone you know has lost money as a result of investing money with Brookstreet, contact Shepherd Smith Edwards & Kantas LTD LLP immediately. (En Espanol)
Shepherd Smith Edwards & Kantas LTD LLP Law Firm:
Our law firm represents institutional and individual investors nationwide with significant losses in their portfolios, retirement plans or investment accounts. Our attorneys and staff have more than 100 years of combined experience in the securities industry and in securities law. Several of our lawyers served for years as Vice President or Compliance Officer of brokerage firms.
Each lawyer and staff member of our firm is devoted to assisting investors to recover losses caused by unsuitability, over-concentration, fraud, misrepresentation, self-dealing, unauthorized trades or other wrongful acts, whether intentional or negligent. We have handled over a thousand cases against hundreds of large and small investment firms, including claims against Brooksteet Securities.
Call us at (800)259-9010 or contact us through our Website to arrange a free confidential consultation with an attorney to discuss your experiences with an investment advisor or financial firm which resulted in losses.
Background and Profile of Brookstreet Securities:
Brookstreet Securities Corporation is headquartered in
The firm’s brokers are independent contractors who operate from their homes or sales offices, either individually or in small groups. These brokers receive a much higher percentage of total commissions and fees collected from their clients than they would t higher profile firms, yet they must pay the majority of their own expenses. Without high-profile marketing, Brookstreet representatives generate clients largely through their own efforts.
Brookstreet is an “introducing” brokerage firm, which functions in a sales capacity, while its clients' accounts are held at a “clearing” firm, currently National Financial Services (NFS), a division of Fidelity Services. NFS serves as the “back office” for hundreds of introducing (or “correspondent”) firms including Brookstreet. NFS handles deposits and withdrawals, processes transactions and forwards confirmations and statements to the clients of introducing firms, including Brookstreet. NFS and other clearing firms claim no responsibility for the actions of introducing firms, such as Brookstreet, or their representatives. However, clearing firms have been held liable for their own actions and inactions.
Brookstreet is licensed through the National Association of Securities Dealers, Inc. (NASD) and by various states to sell securities and licensed by the National Futures Association (NFA) to sell commodities and futures contracts. The firm is also licensed through the SEC as a Registered Investment Advisor (RIA) and licensed in various states to market insurance products. Brookstreet also offers investment banking and advisory services to privately and publicly owned firms.
Brookstreet Fined for Compliance Failures
Brookstreet Securities Corporation and
Without admitting or denying the allegations, the firm and Brooks consented to the described sanctions and to the entry of findings that the firm, acting through Brooks, had sufficient information to raise concerns about whether a registered representative's activities were in compliance with NASD rules pertaining to private securities transactions, but Brooks failed to supervise the representative in a manner reasonably calculated to prevent violation of NASD rules. (NASD Case #C02040031)
[Official records demonstrate Brookstreet Securities has been sanctioned and/or fined on at least 20 occasions for regulatory violations by the NASD or state regulators.]
Did Brookstreet Help Embezzle Priest Retirement?
According to documents of a case, now dismissed, an investment advisor, claiming to be an agent of Brookstreet Securities opened accounts at Brookstreet and deposited client funds. One such client was the Diocese of Santa Rosa which gave full control of its assets at Brookstreet to the purported representative.
According to the claims, the advisor then converted the Diocese's funds at Brookstreet for personal expenditures, payments to third parties and for various other purposes.
The Diocese and others complained they were victims of investment fraud and embezzlement by parties including Brookstreet. They stated they were placed into investment programs involving the purchase of U.S. Treasury bonds to generate high returns with no risk to principal. Their claims were that, without authorization, their funds were transferred out of their accounts at Brookstreet.
After being contacted by an Assistant U.S. Attorney regarding questionable activity in the Brookstreet account, the Diocese contacted the Representative and demanded the return of its funds. When only a portion of the funds were returned to the Diocese the government seized the accounts. The Diocese claimed losses of over $3 million.
The claims states that Brookstreet had an affirmative duty to "learn the essential facts related to the perpetrator’s background, investment agreements, licensing, personal credit history, veracity and character," and that, had they done so, they would have learned the advisor was not registered with the SEC, he was using Brookstreet's name in "Investment Agreements" with his clients, and was touting his personal relationship with Stanley Brooks, president of Brookstreet.
Brookstreet employees were also alleged to have ignored "red flags" raised by the withdrawals and approved wire transfers to pay for obvious personal expenses.
The claims were apparently resolved between the parties and Brookstreet and no curt or arbitration decision regarding any liability or payment has been reported.