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”.