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Ex-Brookstreet brokers file $36M claim

By Mark H. Astarita, Esq.

According to InvestmentNews, five brokers at the center of the collapse of Brookstreet Securities Corp. have filed a $36 million arbitration complaint against Brookstreet?s former clearing firm, National Financial Services LLC, alleging that hundreds of millions of dollars that clients lost in highly leveraged collateralized mortgage obligations were directly attributable to National Financial Services?wrongful conduct.According to the article, the brokers are alleging that NFS forced a liquidation of customer securities. I don't know anything about the case, but if those are margin liquidations in customer accounts, without more that is a difficult case. Marging agreements allow for the liquidation of margined securities to meet a call, and while a particular case will turn on the language of the margin agreement, the agreements that I am familiar with allow the clearing firm to do just about anything...continue to full post

Full post as published by SECLaw.com on April 08, 2008 (boomark / email).