Greed As Gospel

Did a brokerage firm prey on good faith to sell bad bonds?

In the late 1980s, when Wall Street was busy churning out Armani-clad traders and chilling the champagne, a small Texas brokerage house was in the midst of a holier mission. Peddling investments in goodwill, AMI Securities sold more than $250 million in bonds on behalf of American churches between 1986 and 1989. But according to a Securities and Exchange Commission suit filed against the firm last week, the bond offering was no blessing to tens of thousands of unsuspecting investors.

Charging AMI with fraud, the SEC claims that purchasers were duped into believing the bonds were risk-free. The SEC alleges that...

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