Three Cedar Brook Financial Partners Brokers’ Licenses Are Suspended Over Allegedly False & Misleading Statements About Subprime Mortgage-Backed Security IMH Fund and Medical Capital Holdings Inc.
Regulators have suspended the securities licenses of Cedar Brook Financial Partners brokers Howard Slater and Michael Perlmuter and firm executive Azim Nakhooda in the wake of allegations that they issued false statements about Medical Capital Holdings Inc. and the IMH Fund, a subprime mortgage-backed security. The sanctions are part of the settlements they reached with the Financial Industry Regulatory Authority.
According to the SRO, Slater, Perlmuter, and Nakhooda also allegedly modified three customer accounts to show false net worth information. Inflating the account balances on paper made the areas of the clients’ portfolios that were in risky funds drop below Cedar Brook’s guidelines that such investments are not to go up over 20% of a person’s holdings. Inaccurate statements were purportedly made via email.
All three men agreed to settle the FINRA allegations without denying or admitting the allegations. As part of their agreements, Perlmutter will pay a $40,000 fine and serve an eight-month suspension. Slater is suspended for five months and will pay $30,000.
Meantime, Nakhooda must pay $50,000 and is suspended for 9 months. (According to FINRA records, Perlmutter has 18 resolved customer complaints with five others still pending, Slater has 11 resolved with fived still pending, and Nakhooda has resolved seven cases with no others pending.)
Another Cedar Brook founder, (and CEO) William Glubiak, has said that the financial firm is taking responsibility for what happened. He admits that an insufficient job was done of clarifying the risks involved with these financial instruments. It was 2009, Cedar Brook was involved in a Ponzi scam involving gas and oil fund Provident Royalties that caused losses for about 50 of its customers that invested about $9 million.
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Morgan Keegan Settles Subprime Mortgage-Backed Securities Charges for $200M, Stockbroker Fraud Blog, June 29, 2011
RMBS Lawsuit Against Deutsche Bank Can Proceed, Says District Court, Institutional Investor Securities Blog, April 4, 2013