Another Broker-Dealer Breaks Under Pressure From Increased Lawsuits
By Securities Law on May 3, 2010 | In Legal Actions, Criminal
Less than two months after GunnAllen Financial was shut down, another independent-contractor broker-dealer has closed its doors. AFA Financial Group LLC, with about 100 advisers on staff, made the decision to cease its operation based in Calabasas, California on April 30, 2010.
The firm’s president, Morrie Reiff, said, “Our reps were not producing what they needed to produce to keep the doors open.”
According to Mr. Reiff, the firm took a devastating hit by the downturn of the stock market in 2008 and 2009, and was not able to continue making its errors-and-omission-insurance payments.
In its seven years of operation, AFA had only seen one arbitration claim filed against it until the dramatic increase it suffered in 2010. In 2010 investors have sued the firm seven times, mostly over the sale of Provident Royalties LLC private placements, which was charged with being part of a massive Ponzi scheme in 2009 by the Securities and Exchange Commission (SEC).
| « SEC Takes Action Against Ponzi Scheme Dealing Unregistered Securities | Former Prestige Financial Chief Compliance Officer Barred From Securities Industry » |
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