EX-CEO of Brookstreet is fined in SEC case

— A federal judge in Los Angeles has fined the former chief executive of a defunct California brokerage firm $10 million for alleged civil fraud in selling risky mortgage securities to unsophisticated retail investors before the housing market collapsed.

The Securities and Exchange Commission announced the judge’s order issued against Stanley Brooks, founder, president and CEO of Brookstreet Securities Corp. Brooks also was ordered to pay $110,713 in restitution and interest, and to refrain from future violations of securities laws. Brooks couldn’t be located for comment Friday.

Tom Fehn, one of the attorneys representing Brooks, said Friday that they plan to formally ask U.S. District Judge David Carter to reconsider the ruling. Brooks had disputed the SEC’S allegations.

The case didn’t go to trial because the agency’s request for an immediate ruling was granted. Fehn said Carter unfairly denied Brooks’ request for additional time to respond to the SEC motion.

The SEC charged Brooks and Brookstreet with fraud in December 2009 in one of its early cases on sales of mortgage securities before the financial crisis.

The SEC said Brooks and the firm, which was based in Irvine and closed in 2007, sold risky complex mortgage securities to retirees and others with conservative investment goals and continued to promote them even after learning they could quickly become worthless.

They cost many investors their homes or retirement savings when the securities lost their value after the housing market went bust in 2007, the SEC said.

The SEC also had sued 10 former Brookstreet brokers, accusing them of misrepresenting the mortgage securities to investors.