Stanley Brooks (“Brooks”), founder of defunct brokerage firm Brookstreet Securities (“Brookstreet”), was assessed a penalty of $10 million for securities violations in connection with the sale of collateralized mortgage obligations (“CMOs”) from 2004 to 2007.
The penalty is believed to be one of the largest assessed against an individual for activities related to the subprime-mortgage crisis. Judge David O. Carter, U.S. District Court, Central District of California, entered the final judgment against Brooks after Brooks failed to respond to a motion for summary judgment filed by the Securities and Exchange Commission (“SEC”) at the end of December.
The SEC alleged that Brooks, and his firm Brookstreet, promoted the sales of particularly risky and illiquid CMOs to more than 1,000 retirees with conservative investment goals for whom the securities were unsuitable, and in some cases, made even more unsuitable through the use of margin. The SEC also alleged that Brooks continued to promote and sell the risky CMOs, despite several warnings to Brooks about their danger.
Huge investor losses in CMOs during the subprime-mortgage crisis eventually caused Brookstreet to collapse. Brookstreet closed its doors in June 2007 after failing to meet margin calls for the notes and subsequently failing to meet net-capital requirements.
Investors nationwide who have incurred recoverable investment losses due to specific failures by stockbrokers and brokerage firms, and who may have a FINRA arbitration claim, may contact the Florida securities lawyers at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or by e-mail to email@example.com.