Cliff Popper, the South Florida trader and former Brookstreet Securities broker known for convincing retail investors to get to behind risky subprime mortgages and defrauding them of over $100 million, has died. Popper, who was awaiting the judge’s decision in a civil securities fraud trial where he was a defendant, killed himself earlier this week.
The US Securities and Exchange Commission had accused him of designing an investment program that misled clients, who ended up losing their investments when the housing market collapsed. While with Brookstreet, Popper traveled the US and coached brokers on how to sell the financial instruments. He and his team played a key role in selling CMOs, and as clients invested over $300 million in mortgaged backed securities, they made over $18 million in salary and commissions in three years.
In June 2007, however, as the sub-prime loan market declined and loan-based securities dropped significantly, certain investors borrowed up to 90% of all their investments. Brookstreet Securities Corp. went into decline after National Financial Services LLC (its clearing company) issued a margin call on accounts with collateralized mortgage obligations. The losses caused the financial firm to make shortfalls and lose all its capital. Brookstreet was forced to shut down its operations later that year. More than 600 brokers became unemployed.
In 2009, the SEC charged Popper and several others with securities fraud and of depleting the finances of investors, many of whom lost their life savings, retirement, and homes. At the civil securities fraud trial against him, Popper claimed that he never purposely made misrepresentations to anyone.
Popper was known for his extravagant lifestyle, including a $2.4 million condo and a Sun Life Stadium sky box. During the Superbowl XXXIX weekend in 2005, he spent $2,000 on a limo to transport clients to a Hawaiian Tropic model event. Popper previously worked for four financial firms, including Merrill Lynch Pierce Fenner & Smith Inc. and Workman Securities Corp.
Shepherd Smith Edwards & Kantas LTD, LLP has filed individual claims on behalf of investors that lost money from investing in mortgage backed securities through Brookstreet. Many clients were left in a state of financial limbo when the financial firm shut its doors.
Investors in a CMO purchase entity-issued bonds and get payments in accordance to specific rules. The mortgages are the collateral and the bonds are known as “tranches.” CMOs transform illiquid, individual financial assets and turn them into liquid, tradable capital market instruments so that mortgage originators can fill up their funds, which can then go toward more origination activities.
Broker who touted subprime mortgages kills himself, Miami Herald, January 5, 2011
Subprime suicide: Notorious broker found dead, MSNBC, January 6, 2011
Brookstreet closes down, The OC Register, June 21, 2007
More Blog Posts:
Wedbush Hit with Nun’s Complaint over CMO’s – May Have More Than Brokers in Common with Brookstreet, Stockbroker Fraud Blog, July 18, 2007
Some Brookstreet Brokers Become Wedbush Morgan Brokers, Stockbroker Fraud Blog, July 9, 2007
Northern Trust Securities Agrees to $600,000 FINRA Fine Over Charges It Failed to Properly Monitor High-Volume Securities Trades and CMO Sales, Institutional Investor Securities Blog, June 8, 2011
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