Another independent broker/dealer that sold problematic private placements by Medical Capital and Provident Royalties has gone belly up. Jackson, Miss.-based Meadowbrook Securities, formerly Investlinc Securities, filed to have its registration with FINRA and the SEC terminated July 13.
Meadowbrook reps sold $635,000 in Medical Capital deals between August and December of 2008, and $2.135 million of Provident Royalties during the same period, according to FINRA filings. Leroy Paris II, CEO of the firm, did not return calls seeking comment.
In April, FINRA imposed a sanction against the firm’s chief compliance officer, Jay Lynn Thacker, as part of its effort to crack down on broker/dealers who sold the troubled private placements. FINRA claimed Thacker failed to conduct proper due diligence and investigation into the investments, and he was suspended for six months in any principal capacity and fined $10,000.
“Senior officials at these firms failed to fulfill their responsibilities to customers by not conducting reasonable investigations of these unrelated offerings, especially in light of multiple red flags suggesting liquidity concerns, missed interest payments and defaults,” said Brad Bennett, FINRA executive vice president and chief of enforcement, at the time of the sanctions.
Meadowbrook has 12 reps, according to Meridian-IQ data, and operates in seven states. According to SEC filings, the firm reported net capital of $6,563 as of Dec. 31, with a capital requirement of $5,000. In 2010, Meadowbrook had revenues of $180,200, down from $222,626 in revenues in 2009. It posted net losses of $226,930 and $407,918 in 2010 and 2009, respectively.
Many IBDs have been going under due to large liabilities they face related to alternative investments that have gone bust, including Medical Capital, Provident and DBSI. Meadowbrook is the latest to join the list of imploding firms. Other IBDs, such as Securities America, are being sold off, providing an opportunity for larger firms looking to acquire.
