Metropolitan Mortgage shuts down brokerage
Tue., Dec. 16, 2003
Metropolitan Mortgage & Securities Inc. shut down its brokerage firm Monday after punishing fines and restrictions rendered it a liability.
About 12 people lost their jobs and 70 registered dealers with Metropolitan Investment Services (MIS) will need to affiliate with a different brokerage.
The closure may have triggered the suspension of Metropolitan stock on Monday. No preferred shares of Metropolitan and related companies traded on the American Stock Exchange.
“We’re uncertain why,” said Metropolitan spokeswoman Mary Keller.
A representative of AMEX could not be reached Monday.
The closure of MIS follows an October settlement that forced MIS to pay fines and restitution of about $4 million.
More importantly, the settlement with the National Association of Securities Dealers Inc. stripped the ability of MIS to sell debentures and preferred stock of its parent companies, which relied on MIS as their sole brokerage.
The restrictions have pushed Met Mortgage and Summit Securities Inc. into a cash crunch. Unable to issue stocks and bonds, the companies are struggling to raise money for debt refinancing or new investment. They have hired outside investment advisers to help steer them through the problems.
Keller said Monday that the Spokane financial firm owned by C. Paul Sandifur Jr. was still working on affiliating with a new brokerage.
Metropolitan stockholders have had their MIS accounts transferred to a Southern California investment house called Mutual Securities Inc.
Company executives have said letters are being sent to investors with pertinent information and contact numbers.
The holders of Metropolitan and Summit debentures will continue to receive periodic statements regarding their investments.
Investors can call Metropolitan with questions, Keller said.
Although the companies have suspended dividend payments on preferred stocks, the company has made no such announcements regarding its debentures.
Deb Bortner, chief of Washington state’s securities division, urged investors to remain calm.
“There’s really nothing any of the bondholders can do right now,” she said. “People bought an unsecured piece of debt.
“On the other hand, this is a company with a lot of really valuable assets that can be sold.”
The company claims to have assets of about $1.9 billion.
“Even if the company can’t turn it around,” Bortner said, “this company has assets and people are not going to end up with nothing.”
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