Monday, February 7, 2011

Arbitration Award Forces Closing of B-D

QA3 Financial Corp, a independent broker dealer, announced that it was closing its doors next week. According to, the decision came as a result of an arbitration award against the firm. If true, the firm didn't have much choice - an arbitration award is a hit on net capital. If a firm's net capital falls too low, it must close, and that appears to be the case here.

The firm has been caught up in the Regulation D frenzy, where investors are suing their brokers over failed investments in private placements. According to InvestmentNews, QA3 has been in suits over two deals, Medical Capital and Provident Royalties. Both companies face fraud charges from the SEC, and investors have sued the brokerage firms for selling the security, despite the fact that fraud charges have not been brought against the broker dealers.


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