Los Angeles brokers charged with securities fraud, alleging they had put their customers at risk by refinancing their homes with subprime mortgages

Securities and Exchange Commission has charged five Los Angeles brokers with securities fraud, alleging they had put their customers at risk by refinancing their homes with subprime mortgages which they could not afford, to fraudulently sell them unsuitable securities."This case demonstrates the SEC's commitment to halting fraudulent sales practices by brokers and others in the securities industry," SEC Division of Enforcement director, Linda Chatman Thomsen said.The SEC has alleged that at a time when investors were already losing their homes in record numbers, these brokers pushed their customers into risky and unsustainable subprime mortgages as a means of financing a fraud.Not only was the whole scheme fraudulent, but the brokers profited by charging commissions at each stage, SEC said in a statement.
The SEC would relentlessly pursue unscrupulous brokers and other securities industry professionals who seek to line their own pockets at their customers' expense, it added.The Commission has alleged that the five registered representatives, who worked for World Group Securities Inc, paid themselves high commissions on both the subprime mortgages and the securities purchases.While the customers generally were of modest means, had little prior investment experience, little or no formal education beyond high school and some of them did not speak English fluently or at all, the statement added