Category Archives: Unsuitable Investments

Brookstreet- Risky CMO’s Lead to $10MM Fine

The SEC’s case against the former CEO of Brookstreet Securities Corp., Stanley C. Brooks, has led to a fine of 10 million dollars. A federal judge recently entered this penalty, which was the maximum allowable, for selling risky mortgage-backed securities to investors whose goals were conservative.

Rex Securities Law represented a number of these victims. Most were retirees, living on fixed income who could ill afford to take the risks associated with these products. Unfortunately the brokers told the customers that the products were safe and secure and that they would provide steady income, at rates substantially higher than more traditional investments.

This is another case of If It Looks Too Good to be True, It Probably Is.

When the economy faltered, these illiquid & risky investments plummeted in value, millions were lost and the lives of thousands of retirees were altered drastically as they came to grips with the fact that they could no longer afford their living expenses.

Further misfortune ensued, when unable to provide restitution to the victims, the company collapsed.

Tragedy continued when Clifford Popper, one of Brookstreet’s local salesmen who was being sued by the SEC for his participation, committed suicide in 2011.

Moral of the story is to question any investment that is paying a return inordinately higher than the other conservative investments. Wall Street will continue to pump out these products despite regulatory attempts to stop it.

Currently we are seeing potential similar issues with REITs (Real Estate Investment Trusts) and CLO’s (collateralized loan obligations).

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

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