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Brookstreet Securities Collapse: Where Were the Regulators?

By Michael MacPhail, Esq.

The recent collapse of Brookstreet Securities raises serious questions about the efficacy of  regulation by the SEC, the NASD and state regulators.  In late June, Brookstreet fell below net capital requirements and shut it doors after its clearing firm, National Financial Services (?NFS?) suddenly wrote down the price of extremely risky and illiquid collateralized mortgage obligations (?CMO?s?) that Brookstreet had sold to its retail customers.  Brookstreet?s headquarters in Orange County, California provides an ironic backdrop for this sordid story, since Orange County itself lost millions buying CMO?s in the early 1990?s.              Publicly disclosed information indicates that Brookstreet perpetrated a massive fraud on its customers...continue to full post

Full post as published by NASD, SEC and Regulatory Defense Blog on July 16, 2007 (boomark / email).