For the second year in a row, Newbridge Securities Corp., a small to midsize broker-dealer with a history of compliance problems, has released a tough portrait of its financial health.
At the end of 2019, the firm had an accumulated deficit of $9.2 million and net cash used by operations, a cash flow metric, of $928,000, according to its annual audited financial statement on file with the Securities and Exchange Commission.
That puts the firm in an unenviable position, according to the filing. “These conditions raise substantial doubt about the company's ability to continue as a going concern,” according to the filing, known as a Focus report. Although Newbridge filed the report at the end of February, it did not become publicly available until recently on the SEC's website.
The firm has about 175 registered reps and 50 branches.
In the Focus report for 2018, Newbridge's auditor said the firm had sizable financial problems. “The company has a large accumulated deficit and negative cash flows from operations,” according to a letter from Liggett & Webb, which was addressed to the firm’s board.
Newbridge CEO, Thomas Casolaro, declined to comment when asked about the firm's latest disclosure of deficits.
According to its most recent Focus report, the company has taken actions to “obtain additional funding and implement a strategic plan” to keep it going in the future. It does not specify what those actions are.
Newbridge has 33 so-called “disclosure events” on its BrokerCheck report since opening in 2000. Such events range from fines by regulators to reports of arbitration awards.
Last year, the Financial Industry Regulatory Authority Inc. censured Newbridge and fined the firm $225,000 for failing to adequately supervise the sale of complex securities such as structured notes and leveraged, inverse and inverse-leveraged exchange-traded funds.
In 2017, the Pennsylvania Department of Banking and Securities fined the firm $499,000 for failing to supervise a broker in connection with sales of structured products to his clients in the state.
Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.
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