DATELINE: GOLDEN VALLEY, Minn.
BODY:
An irate client was arrested at the offices of Stockwalk Group Inc., a financially troubled brokerage that had been forced to halt trading operations since earlier in the week because of a liquidity crisis.
Stockwalk notified police Thursday after receiving a threatening phone call from the client, who later came to the offices to see his broker, Sgt. Steve Johnson said.
“He said he was mad because of something having to do with his assets,” Johnson said. The client was jailed but released Thursday evening, and charges were pending, Johnson said.
“It was an unfortunate situation,” said Matthew Kyler, executive vice president of marketing, who said the man did not have a weapon.
Kyler said executives met Thursday with potential buyers in negotiations overseen by the Securities Investor Protection Corporation, which helps investors recover their funds from financially troubled brokerages.
To resolve its problems, Stockwalk, the third-largest full service securities firm in the Twin Cities, has been in talks about the possible sale of all or part of its business.
Kyle said Stockwalk expects multiple bids for its business and that the most likely outcome would be the sale of one or more of its three subsidiaries. Those units include the Miller Johnson brokerage, the Stockwalk.com online brokerage and MJK Clearing, which clears trades for Miller Johnson and other brokerage firms.
Stockwalk’s sudden capital shortfall occurred because of a soured transaction with Native Nations Securities of New York City. Native Nations failed to make a $60 million payment to MJK Clearing for a loan of shares of Genesis-Intermedia Inc., a Van Nuys, Calif., firm in which Saudi arms dealer Adnan Khashoggi is a major investor.
The default forced Stockwalk to suspend most customer transactions Tuesday after its capital fell below the minimum required by the Securities and Exchange Commission.
Native Nations suspended trading operations last Friday, and it is unclear whether it will make good on the debt to Stockwalk. Trading in the stock of Genesis – a direct marketer of instructional videos on love, diet and finance – was halted Tuesday, and securities regulators have not indicated when they will allow trading in that company to resume.