Struggling broker-dealer Fintegra files for bankruptcy

Most brokers moving to Securities America in wake of $1.5 million arbitration award

Sep 24, 2015 @ 1:48 pm

By Mason Braswell

Fintegra, a Minneapolis-based broker-dealer that was hoping to be able to salvage its business after being hit with a $1.5 million arbitration award in June, was unable to stay afloat.

The firm, which worked with around 140 brokers, filed for bankruptcy on September 16, according to filings in U.S. Bankruptcy court in Minnesota. Fintegra reported it had assets of $1.8 million and liabilities of $2.6 million.

In June, the firm halted its securities business after a $1.5 million arbitration award tied to supervision of allegedly unsuitable sales of an unregistered security, Miasole Investments II. The award set the firm below its net capital requirements of at least $250,000.

The president of Fintegra, Doreen Weber, said in June that the firm was exploring options that would have allowed it to resume selling securities. The firm had brought in $18 million in revenue in 2014 and had brought in $9.6 million this year as of September.

On July 19, however, Fintegra entered into an agreement to move its advisers to Securities America Inc., a subsidiary of Ladenburg Thalmann Financial Services Inc. that has about 2,000 brokers.

Fintegra said that it was only able to pay $300,000 of the award, according to a complaint filed in July by the firm's customers in federal court in Minnesota.

Ms. Weber did not return messages seeking comment.

A spokeswoman for Securities America, Natalie Hadley, was not immediately able available to comment.

An attorney for the former clients, Randall K. Clavert of an eponymous firm in Oklahoma City, said that so far none of the award has been paid.

Other claims may still be pending against Fintegra. In the annual FOCUS report filing with the Securities and Exchange Commission, Fintegra said that it was subject of five separate lawsuits “which claim securities sold through their registered representatives were either unsuitable or in violation of state securities laws."

The company was defending itself against the allegations and did not believe it was at fault, according to the filing.

News of the bankruptcy was first reported in the Minneapolis/St. Paul Business Journal.

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