(Dow Jones) Here's one more argument in favor of a fee-only business model: Bankruptcy trustees are laying claim to more brokers' commissions, often long after they've been spent.

One recent case, filed against more than 45 broker-dealers, seeks to recover $251 million in damages plus interest, including the return of about $34 million in fees and commissions they received for selling private placements in Provident Royalties LLC.

The SEC charged Provident with securities fraud in 2009, alleging in a civil complaint that the offerings were effectively a Ponzi scheme. Broker-dealers named in the suit include Securities America Inc., a unit of Ameriprise Financial Inc., and independent broker-dealer QA3 Financial Corp., both based in Nebraska.

Trustees in bankruptcy are increasingly eyeing commissions and fees that advisors receive from issuers in exchange for selling certain investments, says Jack Williams, a bankruptcy professor at Georgia State University College of Law in Atlanta. The strategy wasn't common five years ago, he says. "Clearly in past couple of years, that's been an area that trustees perceived to be fertile," he says.

A trustee in a bankruptcy case involving Stanford Financial Group, for example, targeted $40 million of fees, commissions and loans received by 66 former Stanford financial advisors who sold the firm's purportedly high-yielding CDs. The SEC filed fraud charges in 2009 against jailed Texas financier R. Allen Stanford, who is awaiting trial, for running an alleged $7-billion Ponzi scheme involving sales of the CDs. The trustee is trying to recoup a total of $925 million for investors.

Adopting a fee-only structure, in which the advisor charges hourly or based on a percentage of a portfolio's value, would likely insulate broker-dealers from clawback cases in bankruptcy proceedings, Williams says. That's because the advisor is then being paid in a direct relationship with the investor, and not by issuers of a security or other product who could later become debtors. An issuer wouldn't have a property interest in those types of fee arrangements, and thus it couldn't be sought in a bankruptcy proceeding, he says.

Of course, advisors would still face possible arbitration or lawsuits by clients who felt they were wronged. "Investors couldn't use a clawback but they would have another way of going about the case," says Andrea Dobin, a bankruptcy lawyer in Trenton, N.J.

The bankruptcy proceedings involving Provident Royalities don't preclude claims by individual investors against their advisors, and scores of arbitration claims have been filed against broker-dealers who sold the investments, say lawyers. While investors could get something from the clawback effort, historically "they get virtually nothing" that way, says Andrew Stoltmann, a Chicago-based lawyer who is representing investors' arbitrations involving the private placements.

The trustee in the Provident bankruptcy alleges that fees and commissions paid to the broker-dealers by a company set up by Provident were a "fraudulent transfer," according to the complaint. Terms of one offering, for example, provided for an 8% sales commission plus a 1% due-diligence fee, according to the complaint. Effective due diligence wasn't carried out, the trustee alleged. "The argument is they provided no value in exchange for the fees," says Dobin.

Dobin says trustees' clawback suits can be more efficient, since it is one legal action on behalf of all investors against multiple brokers, as opposed to many legal actions, each on behalf of one investor.

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