Securities broker dealer for bankruptcy liquidation amid legal claims 

bankruptcy

An 82-employee securities broker-dealer has shut down and filed for Chapter 7 bankruptcy liquidation after customers asked a federal judge to enforce a $1.54 million arbitration award.

Fintegra’s Sept. 16 petition for bankruptcy protection lists $1.8 million in assets and $2.55 million in debt.

Most of those liabilities are from Fintegra customers who won a June 10 Financial Industry Regulatory Authority (FINRA) arbitration against the firm. FINRA is the financial industry’s self-funded regulator.

FINRA said the arbitration panel found Fintegra and a broker violated state anti-fraud provisions related to the sale of an unregistered security called MiaSole Investments II.

Fintegra said it could only pay $300,000 of the $1.54 million arbitration award, according to a lawsuit filed by the investors against Fintegra in Minnesota’s U.S. District Court. Their lawsuit said the firm is worth about $4 million.

The firm reported $9.64 million in year-to-date income on its bankruptcy filing, down from $18.3 million in 2014 and $19.5 million in 2013.

Fintegra co-founder CEO Doreen Weber could not be reached for comment. Fintegra’s bankruptcy lawyer, who filed the bankruptcy case the day before her client’s response to the lawsuit was due to the court, declined to discuss the case.

Weber told InvestmentNews in June that the the arbitration ruling forced the firm to “take an immediate charge to its income statement … result[ing] in Fintegra having inadequate net capital to conduct business as a broker-dealer.”

Fintegra has since permanently closed, according to a message on the Brooklyn Center-based firm’s phone line. FINRA records show the financial advisory firm has requested termination of its registration with the Securities and Exchange Commission (SEC), FINRA, and the 26 states where it was previously registered, including Minnesota.

The bankruptcy filing puts the lawsuit and any others against Fintegra on hold. Fintegra was a defendant in five lawsuits as of the end of 2014, according to the firm’s 2014 annual report filed with the SEC.

The filing said those lawsuits “claim securities sold through their registered representatives were either unsuitable or in violation of the state securities laws and common law. The company is actively defending these allegations and does not believe it is at fault.”

Source: bizJournals –  Securities firm files for bankruptcy liquidation amid legal claims

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