When securities firms fail

Following the U.S. financial meltdown that began in September 2008, stock markets around the world have experienced unprecedented volatility. While the impact of the crisis reverberated in many sectors, the financial services industry was particularly hard hit. Brokerage firms saw fee revenues fall as a result of reduced trading activity. Declining margin loans also put a squeeze on interest revenues.In addition to shattering investor confidence, the credit crunch called investment firm practices into question. With media headlines predicting the failure of securities firms and other market intermediaries, investors have become worried about the safety of their investments.What happens when a securities firm goes bankrupt? How can investors protect their money? If you have ever administered the bankruptcy of a securities firm, or represented anxious investors, you know there are no easy answers to these questions. Unraveling the affairs of a failed securities firm, and distributing its remaining assets, is fraught with legal and practical complexities. [Read full article published in March 2009 in Rebuilding Success magazine]

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