In March 2019, Newbridge Securities Corporation (“Newbridge”) filed its Form X-17A-5, commonly called a firm’s Focus Report, with the Securities & Exchange Commission (“SEC”). The Focus Report showed that in 2018, Newbridge had almost $33 million in revenues, yet reported only about $108,000 in net profits.
The accounting firm that audited Newbridge disclosed in its “Opinion on the Financial Statements” that “there is substantial doubt about [Newbridge’s] ability to continue as a going concern.” This means that the finding from the CPA firm of Newbridge in financial trouble means investors that hold accounts with the firm should be concerned.
Newbridge is a Boca Raton, Florida based brokerage and financial services firm. Although the firm claims to have “over 80 locations in the US”, its website only lists offices in Boca Raton, Ft. Lauderdale, Scottsdale, Chicago and a few locations in New York.
As a recent InvestmentNews article pointed out, Newbridge has “a history of compliance problems” that includes 28 disclosed regulatory events and a number of negative arbitration awards since Newbridge was established in 2000. These multiple events have resulted in millions in fines as well as many significant arbitration awards and settlements made to customers.
For example, in one case heard in Baltimore, a FINRA arbitration panel specifically found that Newbridge had “failed to supervise” one of its brokers and was, therefore “negligent and liable to Claimants” for their investment losses, interest and attorney’s fees.
The potential loss of other FINRA arbitrations were a significant concern from the auditing firm and a substantial basis for the auditing firm’s assessment that Newbridge may not be able to continue as “a going concern.” Specifically, the auditor noted that Newbridge has a number of existing legal claims that are unresolved and Newbridge has set aside a little more than $625,000 to cover the costs of those claims.
However, the auditor determined that the actual potential liability of those outstanding claims are actually more than $4.5 million, meaning if the legal cases do not go as well as Newbridge has anticipated, the company would be forced to go out of business.
What Should Newbridge Securities Customers Do?
Customers with investment accounts at Newbridge should take notice of the firm’s financial condition and uncertainty. Often, when a brokerage firm is in such trouble, customers suffer at the hands of investment advisors seeking to sell high commission products to customers or to “churn” their accounts in order to increase firm revenue.
Given this information, it would make sense for investors to pay special attention to their Newbridge account statements and be leery of any “high pressure” sales attempts. Moreover, if you have any issues with Newbridge or one of its representatives, time is of the essence. If Newbridge is indeed in financial distress, those customers who file claims first will be the ones most likely to receive a recovery.
If you or someone you know is a current or former customer of Newbridge Securities and has any concerns about their investment accounts, please reach out to the law firm of Shepherd, Smith, Edwards & Kantas immediately.
Our law firm has a team of attorneys and consultants with more than 100 years of combined experience in the securities industry and securities law. We use that experience to help investors recover wrongful losses through FINRA arbitration, court actions or other legal processes. All communications will be kept strictly confidential and your consultation will be done with no charge or obligation to you. Call or email us today.
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