Troubled Broker's Sales Force Up For Grabs
Los Angeles-based Wedbush Morgan Securities appears to have the inside track on recruiting hundreds of independent brokers set adrift by the collapse of another California firm.
Brookstreet Securities Corp. reportedly shut its doors in late June after suffering losses in mortgage-backed securities. Last week, Investment News reported a number of firms have since picked up some of Brookstreet's 650 nationwide independent brokers, but Wedbush Morgan holds a unique advantage.
Scott Brooks, the son Brookstreet founder Stanley Brooks, moved to Wedbush Morgan and invited Brookstreet's representatives to join him, Investment News said. It quoted Wedbush Morgan's CEO saying that firm "hopes to land more than 100" former Brookstreet reps.
Other brokerages that have reportedly taken on Brookstreet reps are Securities America Inc. of Omaha, Neb., and J.P. Turner & Co. LLC of Atlanta.
Reuters reported June 29 that Brookstreet collapsed after its clearing broker, a unit of Fidelity Investments, made "heavy markdowns" to the prices of collateralized mortgage obligations held in margin accounts for clients. The Irvine, Calif., firm had employed 80 headquarters staff, in addition to its independent sales force. The SEC is investigating, Brookstreet President Stanley Brooks told Reuters at the time.