List of Failed Brokerage Firms- Why 10 Firms Failed?

list of failed brokerage firms

In this blog post, I will cover the list of failed brokerage firms. They were 10 in total, why those brokerage firms failed?

The occurrence of a brokerage firm’s failure is exceedingly uncommon. Such failures may stem from breaches of duty or violations of regulations, with any misconduct exerting adverse effects on the firm’s operations. An illustrative case in the United States involved the violation of record-keeping provisions in federal securities law.

Collectively, these failed firms consented to a penalty payment totalling $289 million. Inadequate record-keeping hampers the regulatory body’s ability to monitor a firm’s operations effectively, potentially leading to the downfall of brokerage firms.

This article will reveal a list of failed brokerage firms in the USA. Please continue reading to discover more:

What Constitutes a Brokerage Firm?

A brokerage firm serves as an intermediary, facilitating transactions between buyers and sellers for various securities such as shares, bonds, and options. Brokers, the individuals behind these firms, earn commissions or fees upon successfully completing transactions, which may be either annual or per transaction.

In a market with millions of investors and numerous companies, brokerage firms play a crucial role in concluding transactions, aligning buyers and sellers on a price. In today’s digital era, software often replaces human brokers, matching investors with companies and earning fees from clients, listed companies, and exchanges.

List of Failed Brokerage Firms

The following firms violated record-keeping provisions set by the Securities and Exchange Commission (SEC), resulting in their failure:

  1. Wells Fargo Securities, LLC.
  2. Wells Fargo Cleaning Services, LLC.
  3. Wells Fargo Advisers Financial Network, LLC.
  4. BNP Paribas Securities Corporation.
  5. SG Americas Securities, LLC.
  6. BMO Capital Markets Corporation.
  7. Mizuho Securities USA, LLC.
  8. HoulihanLokey Capital, Inc.
  9. Moelis and Company, LLC.
  10. Wedbush Securities, Inc.

1. Wells Fargo Securities, LLC: Wells Fargo Securities, LLC, is a prominent financial services and investment banking subsidiary of Wells Fargo & Company. Specializing in capital markets services, it offers a wide range of financial products to corporations, institutional clients, and government entities.

2. Wells Fargo Cleaning Services, LLC: Wells Fargo Cleaning Services, LLC, is a subsidiary of Wells Fargo & Company that focuses on providing cleaning and maintenance solutions. While not a financial arm, it plays a crucial role in maintaining operational hygiene and safety within the Wells Fargo network.

3. Wells Fargo Advisers Financial Network, LLC: Wells Fargo Advisers Financial Network, LLC, operates as a subsidiary of Wells Fargo & Company, offering financial advisory services to independent financial advisors. It provides a platform for advisors to build and grow their practices while leveraging Wells Fargo’s resources.

4. BNP Paribas Securities Corporation: BNP Paribas Securities Corporation is the U.S. affiliate of BNP Paribas, a global banking and financial services institution. Specializing in securities and investment services, it serves a diverse clientele, including institutional investors, corporations, and governments.

5. SG Americas Securities, LLC: SG Americas Securities, LLC, is the U.S. subsidiary of Societe Generale, a leading European financial services group. As a securities firm, it engages in a range of activities, including trading, research, and investment banking services.

6. BMO Capital Markets Corporation: BMO Capital Markets Corporation is the investment banking subsidiary of Bank of Montreal (BMO), one of Canada’s major financial institutions. It provides a comprehensive suite of financial services, including corporate and institutional banking, capital markets, and advisory services.

7. Mizuho Securities USA, LLC: Mizuho Securities USA, LLC, is the U.S. subsidiary of Mizuho Financial Group, a prominent Japanese banking and financial services company. Specializing in securities and investment banking, it caters to a diverse client base in the American market.

8. HoulihanLokey Capital, Inc.: HoulihanLokey Capital, Inc., is an investment banking subsidiary of Houlihan Lokey, a global investment bank and financial advisory firm. It offers a range of services, including mergers and acquisitions, financial restructuring, and capital markets advisory.

9. Moelis and Company, LLC: Moelis and Company, LLC, is an independent investment bank providing strategic and financial advisory services. Known for its global presence, Moelis and Company assists clients in various sectors with mergers and acquisitions, recapitalization, and other financial transactions.

10. Wedbush Securities, Inc.: Wedbush Securities, Inc., is a financial services and investment firm offering a diverse range of services, including private wealth management, capital markets, and institutional sales and trading. Known for its personalized approach, Wedbush serves individual and institutional clients across different markets.

These firms not only faced failure but were also compelled to pay substantial penalties, exceeding $289 million in total. Wells Fargo Securities LLC, Wells Fargo Cleaning Services LLC, and Wells Fargo Advisers Financial Network, LLC jointly incurred a $125 million penalty. BNP Paribas Securities Corporation and SG Americas Securities, LLC faced $35 million penalties each.

BMO Capital Markets Corporation and Mizuho Securities USA, LLC were fined $25 million each. HoulihanLokey Capital, Inc. faced a $15 million penalty, while Moelis and Company, LLC, and Wedbush Securities, Inc. each faced $10 million penalties. Lastly, SMBC Nikko SeuritiesAmercia, Inc. was penalized $9 million.

These hefty penalties aim to prevent future breaches and compensate for the inconvenience caused to investors.

Consequences of Brokerage Firm Failure

Investors may fear that a failed brokerage firm jeopardizes their securities and investments. However, SIPC (Securities Investor Protection Corporation) ensures the safe transfer of securities to another registered brokerage firm in the event of failure. SIPC offers protection by replacing missing stocks or securities up to a value of $500,000, with half in cash.

It’s crucial to note that SIPC protection covers only investors, not partners, directors, officers, or those with ownership in the failed firm.

FAQs to List of Failed Brokerage Firms

1. How often do brokerage firms fail?
Brokerage firm failures are rare occurrences, with options available for self-liquidation or acquisition by a registered brokerage firm.

2. What is SIPC?
SIPC, a non-profit organization, returns missing securities to investors and provides compensation up to $500,000 when assets cannot be located.

3. What should customers do if their brokerage firm is liquidated?
Investors must file claims with SIPC before the specified date, following SIPC instructions and gathering relevant records.

4. Which are the biggest and most trusted brokerage firms in the USA?
Charles Schwab, Fidelity Investments, and TD Ameritrade are considered some of the most reliable brokerage firms in the USA.

5. Are all brokerage firms subject to the same record-keeping provisions? While there are general regulations, specific record-keeping provisions can vary. Brokerage firms must comply with the rules set by the regulatory authorities overseeing their operations.

6. How does the failure of a brokerage firm impact the broader financial market? The failure of a single brokerage firm typically doesn’t have a widespread impact on the financial market. However, in rare cases, systemic issues can arise, leading to broader consequences.

7. Can investors take legal action against a failed brokerage firm? Yes, investors have the right to pursue legal action if they believe a failed brokerage firm has caused financial harm. However, the success of such actions depends on the specific circumstances and applicable laws.


Despite knowing the list of failed brokerage firms in the USA, investors have various options with reputable registered brokers. Regulatory actions, including penalties, may be taken against brokerage firms for breaches. In the event of a firm’s failure, customer assets remain secure, and SIPC ensures the return or compensation of missing assets. It is advisable to assess a brokerage firm’s reliability and operations before engaging with it.

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