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Report: Regulator takes control of Tampa's GunnAllen Financial

TAMPA – GunnAllen Financial Inc., a Tampa investment brokerage that was briefly controlled by businessman John Sykes, has fallen below minimum capital rules set by federal regulators and did not open for full-service business this morning.

Gunnallen has suffered a history of controversies and questions about its financial viability. Sykes severed his ties to GunnAllen late last year without comment.

A story dated Monday in the trade publication Investment News says the Financial Industry Regulatory Authority, or Finra, told GunnAllen last week it would be in a net capital violation as of Monday morning — if the firm did not receive an infusion of cash over the weekend.

GunnAllen executives told employees they were losing their jobs this morning at the company's Tampa headquarters, the story stated.

A spokesman at FINRA had no comment. Typically, a regulator-seized brokerage continues to operate to help investors wind down or liquidate their accounts, but the firm is otherwise not allowed to conduct trades.

The trade publication reports that GunnAllen faces a raft of lawsuits with investors seeking as much as $50 million in damages. Many of those claims stem of rogue broker Frank Bluestein who allegedly steered clients into a Ponzi scheme that eventually went bust in 2007.

GunnAllen also faces client lawsuits over the sale of Provident Royalties LLC private placements. Last week, Finra expelled the broker-dealer instrumental in marketing those deals, Provident Asset Management, for its role in a $475 million Ponzi scheme, the regulator told Investment News.

Report: Regulator takes control of Tampa's GunnAllen Financial 03/22/10 [Last modified: Wednesday, March 24, 2010 1:17pm]
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