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Arbitration Award Has Forced Allied Beacon out of Business

Friday, June, 7, 2013


Allied Beacon Partners, Inc., after an arbitration case involving its predecessor’s sale of fraudulent placements, will now have to pay $1.6 million as a result of the judgment—an award that will close the business permanently.  The closing of its doors is due to the fact that the amount of the award has caused Allied Beacon’s net capital level to fall below the amount required by regulators in the securities and exchange industry.  According to its parent company, Beacon Acquisition, Allied Beacon "can no longer carry on business as an active broker-dealer."

According to Allied Beacon’s website, the closing of the company was due to the “changing regulatory and legal landscape” and clients would be able to have complete access to their accounts, with cash balances remaining the same before the arbitration award was announced.  However, only account transfers can occur and the company can only liquidate securities positions at this time.  Currently, former employees of Allied Beacon are seeking employment with other securities firms. 

The recipients of the $1.6 million arbitration award are investors involved in Allied Beacon’s predecessor firm’s participation in what was later to be discovered as Ponzi schemes, namely Medical Capital LLC and Shale Royalties.  According to the investors’ allegations, Allied Beacon’s predecessor firm failed to conduct due diligence in researching the investments.  In doing so, the investors’ money was used in fraudulent investment operations.

The Financial Industry Regulatory Authority (FINRA) arbitration panel agreed with the investors’ allegations and on May 21st, issued the ruling that Allied Beacon would have to pay the $1.6 million to assist the investors in recouping their losses.  Meanwhile, the company announced this week that they would be closing their doors permanently in the aftermath of the arbitration panel’s decision.