More Firms Go Belly Up For Peddling DBSI TICs

Alternative Wealth Strategies out of Cherry Hill, NJ has gone belly up, according to Investment News and the Financial Industry Regulatory Authority (FINRA). The other one is California based MCL Financial Group.

Apparently, FINRA suspended Alternative Wealth’s membership at the end of May 2011 after failing to pay arbitration fees. People familiar with the situation speculated that the firm was unable to put enough money into its capital account to cover contingent liabilities related to claw back claims by some of the sponsors of private placements that have gone bust. According to a December 2009 financial statement, there was a claim pending for $314,000, plus expenses. Reports were that the firm had sold tenants-in-common exchanges (TICS) issued by DBSI that generated $1.1 million in commissions.

MCL Financial was shuttered this week, adding to the list of firms closing this year due to selling alternative investments. It had gotten over 40% of its revenue from the sale of REITs and LLCs. According to SEC filings for 2010, MCL got 26% of its revenue from REITs and 15% from limited liability companies, which are private placements. Last year, receivers for the bankrupt DBSI sued MCL to recover $210,000 in commission earned from selling TICs issued by DBSI.MCL reported $90,671 in net capital at the end of 2010.

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