Another IBD Bites the Dust

Thursday, June 16, 2011 01:13
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Another IBD Bites the Dust

Tags: broker-dealers | FINRA

Independent broker/dealer Alternative Wealth Strategies in Cherry Hill, N.J., has gone belly up, according to Financial Industry Regulatory Authority documents. FINRA’s BrokerCheck report says the firm’s membership was suspended at the end of May after it failed to pay arbitration fees, but it’s unclear what these arbitrations were related to. The firm sold real estate deals by DBSI, which went bankrupt.
 

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Many IBDs have been going under due to large liabilities they face related to alternative investments that have gone bust, and Alternative Wealth Strategies is the latest to surface. Others, such as Securities America, are being sold off, providing an opportunity for larger firms looking to acquire.
 
Errors & omissions insurance, and FINRA and SIPC fees are rising, squeezing many B/Ds. These days, E&O insurance, which covers things like operational errors, is typically in the six figures for most B/Ds. 
 
According to Investment News, nearly 2,500 reps have been displaced due to broker-dealers going out of business in the past year. At the end of 2009, Alternative Wealth Strategies had a net capital of $24,981 and about 40 reps. 

 
Other IBDs that have closed lately include:
 

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