Another small broker-dealer that sold high-risk private placements is out of business.
Securities Network LLC of Norcross, Ga., at the end of March terminated its broker-dealer license with the
Financial Industry Regulatory Authority Inc.
The firm wasn't a big seller of Provident Royalties LLC preferred stock, according to court filings. Securities Network sold just $215,000 of Provident preferred stock, according to federal bankruptcy court in Dallas.
Other firms sold tens of millions of dollars of the product. In total, broker-dealers sold about $485 million of Provident shares.
According to Finra's Broker-Check system, Securities Network had no history of regulatory fines.
When reached, an official at the firm, who declined to give her name, said that the firm would not comment about the matter.
The list of broker-dealers that sold Provident — or another series of failed private placements from Medical Capital Holdings LLC — and subsequently shut down is considerable. It includes GunnAllen Financial Inc., Jesup & Lamont Securities Corp. and QA3 Financial Corp.
The Securities and Exchange Commission charged both Medical Capital and Provident Royalties in 2009 with fraud, and securities regulators followed with investigations into broker-dealers' sales practices.
Mounting legal bills due to lawsuits from investors seeking their money back have crushed certain broker-dealers that sold the private placements.
Securities Network had shrunk considerably over the past few years.
The broker-dealer had $261,260 in revenue last year, according to its filings with the SEC, and a loss of almost $18,000. In 2007, the firm reported an $180,000 profit on $2.6 million in total revenue.
The firm was involved in litigation “incurred in the normal course of business related to sale of an investment that is alleged to have been a Ponzi scheme,” it said in its annual Focus report, which it filed with the SEC in February.
Both Medical Capital and Provident have been described as Ponzi schemes by the SEC.
Securities Network is not related to Securities Service Network, another independent broker-dealer.
E-mail Bruce Kelly at [email protected].
