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What is a Broker to Do?

What is a broker to do when their firm closes its doors after being found selling bad investments to clients?  Just go work for another broker-dealer.

Milkie/Ferguson Investments had been in business since 1986.  And it was out of business on July 26th, when the firm filed a request with FINRA to withdraw as a broker-dealer.

By Wall Street standards, Milkie/Ferguson was a smaller firm, with 40 brokers raking in $6.6 million in revenue last year.  But being a smallish firm didn’t stop them from being one of the biggest sellers of Provident Royalties LLC private placements.  Provident promised returns as high as 18% annually, and Milkie/Ferguson reps sold that dream to their clients by way of $4.1 million in Provident preferred shares.

The promises were empty, and the investments were a fraud.  Provident was charged in 2009 with running a Ponzi scheme…after a total of 7,700 investors were sold $485 million in bad investments.

Milkie/Ferguson isn’t the only one.  Of the 60 firms that sold Provident shares to clients, 23 have shut down as they faced mountains of lawsuits.

But don’t worry about Milkie/Ferguson reps.  When one broker-dealer’s door closes, another opens.  Of the firm’s 40 reps, 26 have already gone to work for Berthel Fisher & Co.  in what the firm calls only a “recruiting deal”.


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