First announced on this Blog last week was news of problems at Brookstreet Securities. Midweek, the firm then reported that “disaster” had struck because CMOs owned by the firm and its clients had been marked down in price and margin calls had caused the firm to reach the brink of failure. On Friday, Brookstreet closed for business.
Over the weekend we heard a rumor, not confirmed, that Scott Brooks, the son of Brookstreet founder Stanley Brooks, had joined Wedbush Morgan Securities of Los Angeles and invited the Brookstreet brokers to do the same. That rumor was confirmed today in news reports.
Brookstreet’s brokerage business was conducted through independent contractor brokers similar to giant Linsco Private Ledger and other firms. Before now, Wedbush Morgan did not have an independent contractor brokerage arm, as do other firms including Raymond James Financial, Inc.
It is reported that Scott Brooks, the former executive vice president of Brookstreet, will “substantially build and staff” that part of the business. “I understand that you have options,” he told the reps in an e-mail. “I believe this is an optimal solution for you.”
There is competition among other brokerage firms and headhunters to recruit Brookstreet brokers. including through the use of highly placed Internet ads purchased through Google. An industry source says that Securities America Inc. of Omaha, Nebraska has made particularly aggressive offers.
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