Bankrupt Broker’s Plan Waives Too Much Liability, Watchdog Says

The Chapter 11 plan of an Atlanta broker-dealer that went bankrupt after an employee shorted U.S. Treasuries releases too many company officers and affiliates from liability, a federal bankruptcy watchdog said.

The court shouldn’t confirm IFS Securities Inc.'s plan unless the company pares back the “overly-broad” releases, the U.S. Trustee’s Office, a Justice Department agency that oversees bankruptcy proceedings, said in a filing Monday with the U.S. Bankruptcy Court for the District of Georgia.

IFS filed for bankruptcy April 24 after the firm’s head of fixed income, Keith Wakefield, allegedly shorted U.S. Treasury bonds with company funds. The company lost ...