Ages Financial Services Ltd., a small Boston-area broker-dealer that opened in 1984, shut down Nov. 18, two months after losing a $1.16 million arbitration claim stemming from the sale of bankrupt GWG Holdings bonds.
Ages Financial Services reported $12.6 million in total revenue and a loss of $400,000 in 2023, according to its annual financial statement, known as a Focus report, filed with the Securities and Exchange Commission.
The firm had about 60 financial advisors registered under its roof, with many moving to StoneX Financial Inc., which had been Ages Financial Services’ clearing firm.
Losing million-dollar-plus investor complaints can sometimes lead to small broker-dealers, short on capital and insurance, to shut down, industry observers noted. At least three other broker-dealers that sold defunct GWG bonds to investors have also closed in the past few years.
Ages Financial Services in September lost the arbitration claim to a group of investors who bought bonds issued by GWG Holdings. The $1.16 million award included damages as well as interest and attorney’s fees, with part of their complaint seeking “emotional distress damages” against Ages.
“Ages Financial had some insurance but not enough,” said Adam Gana, the attorney for the investors who won the arbitration award. “I’ve seen this throughout my career. The broker-dealer defends the claim to the death, they get hit with a significant loss, and then they leave or shut down.”
About 40 broker-dealers sold close to $1.6 billion in GWG L bonds, so-called because they were backed by life settlements, before the firm declared bankruptcy in 2022, leaving investors in the lurch.
Ages Financial Services also lost a Financial Industry Regulatory Authority, Inc. arbitration decision in 2023 to investors stemming from the sale of GWG bonds and totaling $246,000.
The $1.16 million September arbitration award caused Ages “to break net capital, rendering the firm defunct,” an attorney for Ages Financial Services wrote in an email to InvestmentNews.
The securities industry's net capital rule is one of the bedrock guidelines for the brokerage industry's small firms, or those with less than 100 registered reps.
The rule essentially regulates the amount of capital a broker-dealer has in the till at the end of the day to settle trades. Small broker-dealers typically use clearing firms to trade, but they can still fall short of required capital on hand.
“We had little choice but to take the matter all the way to hearing because of the way [clients] filed their claims, wrote Kirsten Patzer, a partner with Prince Lobel and Ages Financial Services attorney. “It is sad that a small BD like Ages, with over 40 years in the industry, was forced out of business because of a [Finra arbitration] panel’s overreach.”
In an era of AI euphoria and market FOMO, getting back to basics with fixed income may be the most contrarian and most important move advisors can make.
Voya Financial adds private equity, credit and real estate options to its AMA program, building on support for looser federal investment rules in retirement accounts.
Shannon Reid, president of Osaic and the network’s number two executive, has plenty of challenges, industry executives said.
Auditors flagged the commingling. The COO allegedly knew. Investors kept getting the pitch
The advisors on the move include two brothers leading a family practice in Connecticut, and a husband-and-wife tandem working with business owners in the West Coast.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
