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BROOKSTREET SECURITIES CORPORATION COLLAPSES
Shustak Frost & Partners, P.C., California and New York based lawyers specializing in securities and stock fraud, is interviewing and accepting clients who suffered substantial losses as a result of the recent collapse of Irvine, California based Brookstreet Securities Corporation which shut its doors as a result of heavy losses in mortgage backed securities. Shustak Frost & Partners believes many of Brookstreet Securities' customers may have been the victims of fraud and deception not only by Brookstreet Securities but by its clearing firm, National Financial, a subsidiary of financial giant Fidelity Investments, and possibly others involved in the packaging and marketing of these highly risky mortgage backed securities.
According to managing partner Erwin Shustak, a California securities fraud attorney located in the firm's San Diego offices, many of Brookstreet Securities' customers, seeking secure fixed income investments, were sold various pieces of highly volatile, sub-par CMO's (collateralized mortgage obligations) and were induced to purchase those CMO's on margin. "In some cases, we have heard of investors who bought CMO's paying a five percent yield with money borrowed on margin at rates in the range of 8%-9%" said Shustak. "It makes no sense to borrow money at 6% to invest in a guaranteed certificate of deposit yielding 5%, but the inherent risk in the sub-par mortgages that Brookstreet Securities was selling its customers on margin was a powder keg waiting to explode. Buying these kinds of investments on margin makes absolutely no sense, particularly for elderly or conservative investors", he added.
The meltdown at Brookstreet Secruties began when its clearing broker, National Financial, a subsidiary of financial giant Fidelity Investments, the biggest U.S. based mutual funds company, made heavy markdowns in the value of collateralized mortgage obligations held by in the accounts of Brookstone Financial's clients. As a result of the sudden markdowns in the value of these CMO's, many of Brookstone's customers were forced to either meet immediate and large margin calls or lose their entire investments.
Shustak Frost & Partners, with offices in San Diego, California and New York City, specializes in securities and investor fraud and offers no obligation consultations for Brookstreet customers who lost money as a result of their investments in CMO's. "We question how and why the clearing broker allowed such high margin on what it knew to be volatile CMO's comprised of sub-par mortgages and why it waited so long to markdown the value of those CMO's allowing Brookstone's customers to believe their investments had not sustained heavy losses" said Shustak.
For more information, contact Erwin Shustak, Esq. (Shustak@shufirm.com) or Thomas Frost (tfrost@shufirm.com) or call them at 888.748.8748.
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