Closing broker-dealer’s financials ‘were horrible’

investmentnews.com:

A small broker-dealer based in Scottsdale, Arizona, that sold bonds issued by the bankrupt GWG Holdings Inc. is closing down.

Arque Capital Ltd. filed its termination letter with the Financial Industry Regulatory Authority Inc. last month, according to the firm’s BrokerCheck profile. The firm had just $6 million in RIA assets, according to its Form ADV, and nine client accounts.

Arque Capital’s interim president and CEO, Audrey Kuwabara, did not return messages Thursday to comment.

In May, Kuwabara and two other executives at the firm settled an investor complaint involving GWG bonds for $230,000, according to her BrokerCheck profile. The client’s claims were “without merit” and the executives denied any allegations, according to Kuwabara’s response about the matter on her BrokerCheck report.

Arque Capital opened in 2005, according to Finra, and has four disclosure issues on its BrokerCheck report. In one of those issues, which resulted in a $50,000 fine in 2014, the firm said it was the broker-dealer manager for renewable, secured debentures issued by GWG Holdings; the fine was related to allegedly faulty information in a sales brochure.

Arque Capital is not the first broker-dealer linked to GWG bonds to hit such a hard patch. JRL Capital Corp., a small broker-dealer based in Irvine, California, which also sold the defunct GWG bonds, filed for Chapter 7 bankruptcy May 2 in U.S. Bankruptcy Court for the Central District of California.

A plaintiff’s attorney, Jeff Erez, said he has about 20 investor claims against broker-dealers that sold GWG bonds, which were backed by life settlements, but none against Arque Capital, although he did take a close look at the firm.

“I looked at [Arque Capital’s] financials and they