by Calculated Risk on 6/21/2007 05:50:00 PM

UPDATE2: Mathew Padilla has more: Brookstreet closes down, 100 laid off

From Reuters: Brookstreet Securities says may liquidate (hat tip Padilla)

Brookstreet Securities Corp. on Thursday said it "may be forced to close" after heavy markdowns in collateralized mortgage obligations, according to a letter the firm sent to investors this week.

"Disaster, the firm may be forced to close," Brookstreet told its investors in an e-mail dated June 20 that was obtained by Reuters.

Julie Mains, chief compliance officer, confirmed the contents of the e-mail.

UPDATE: From Investment News (hat tip Steve): B-D warns reps of 'disaster'

[From] in an unsigned e-mail note to its advisers ...

"Today, the pricing system used by National Financial has reduced values in all Collateralized Mortgage Obligation," the e-mail said.

"Many of those accounts were on margin and suffered horrendous markdowns and unrealized as well as realized losses.

National Financial and the regulators expect Brookstreet to pay for realized liquidated losses and take a capital charge for unrealized (mark) to market losses."