Another seller of alternatives goes under

Yet another small brokerage firm that sold illiquid alternative investments closed its doors last week. MCL Financial Group Inc. of Santa Ana, Calif., which had 44 registered representatives, filed its broker-dealer withdrawal form Tuesday with the Financial Industry Regulatory Authority Inc., making it at least the sixth such firm to close this year. The firm, which cleared through Legent Clearing LLC, had $2.9 million in revenue last year, down from $3.2 million in 2009, according to filings with the Securities and Exchange Commission.It posted losses of $10,330 and $447,250 in 2010 and 2009, respectively. Lawrence Singleton, MCL's chief executive, didn't return phone calls seeking comment. Small and midsize firms have struggled for a variety of reasons. Many that sold illiquid private placements and real estate deals have seen a huge rise in legal costs due to litigation filed by investors. In addition, retail investors' lack of trading activity, coupled with historically low interest rates, has hammered a number of broker-dealers. According to its annual Focus report filed this year with the SEC, MCL generated 26% of its revenue last year from the sale of real estate investment trusts and 15% from the sale of limited-liability companies, which often take the form of private placements. According to its profile on Finra's BrokerCheck system, MCL had no recent regulatory actions against it or big losses from Finra arbitrations. Last year, however, the receiver for bankrupt real estate syndicator DBSI Inc. sued MCL and more than 90 other broker-dealers, seeking to claw back commissions generated from the sale of wildly popular tenant-in-common exchanges. In the March Focus report, the broker-dealer said that it didn't expect the resolution of claims against the company to have an adverse affect on the financial position or results of the firm. At the end of last year, MCL had $90,671 in net capital. E-mail Bruce Kelly at [email protected].