Broker/dealer GunnAllen Financial may be getting ready to file Chapter 11 bankruptcy protection, according to an April 21 story in Investment News. If that happens, hundreds of investors with pending arbitration claims against the embattled company will have to get in line for GunnAllen’s remaining assets, including any insurance policies.
In late March, the Financial Industry Regulatory Authority (FINRA) closed the doors on GunnAllen because the company had fallen below minimum capital rules set by federal regulators. GunnAllen’s financial troubles, however, have been ongoing for some time because of lawsuits from investors who say they were defrauded by various GunnAllen brokers.
Many of the lawsuits concern former GunnAllen broker Frank Bluestein, who allegedly operated a multimillion-dollar Ponzi scheme.
GunnAllen also faces lawsuits tied to sales of private placements in Provident Royalties LLC. In March, FINRA expelled Provident Asset Management, LLC for allegedly marketing a series of fraudulent private placements offered by Provident Royalties in a massive Ponzi scheme.
As reported in the Investment News article, if GunnAllen does, in fact, file for Chapter 11 bankruptcy, the value of its insurance policies will be critical to any investor suing the broker/dealer.
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