The Securities and Exchange Commission charged Irvine, Calif.-based Brookstreet Securities Corp. and its President and chief executive Stanley Brooks yesterday with fraud for systematically selling about $300 million worth of risky mortgage-backed securities to customers with conservative investment goals.

The fraud, according to the SEC, cost many Brookstreet investors their savings, homes, or retirement cushions, and eventually caused the firm to collapse.

Brookstreet developed an internal program through which the firm's registered representatives sold particularly risky and illiquid types of Collateralized Mortgage Obligations to more than 1,000 seniors, retirees, and others for whom they were unsuitable, the SEC alleged.

Brookstreet continued to promote and sell risky CMOs to retail investors even after Mr. Brooks received numerous indications and personal warnings that these were "dangerous" investments that could become worthless overnight, the SEC charged.

In a last-ditch effort to save Brookstreet from failing during the financial crisis, according to the SEC, Brooks allegedly directed the unauthorized sale of CMOs from Brookstreet customers' cash-only accounts, causing substantial investor losses.

"These were complex mortgage derivative securities with byzantine pricing, valuation and trading characteristics," said Robert Khuzami, Director of the SEC's Division of Enforcement. "Selling them to retirees and conservative investors was profoundly and egregiously wrong."

The SEC complaint was filed in federal district court in Santa Ana, Calif.

The Associated Press reported Tuesday that  Mr. Brooks’ lawyer, H. Thomas Fehn, said  the SEC "identified the wrong villain" in suing the firm and Brooks, whom he said is "involuntarily retired" and no longer selling securities.