Reuters (November 6, 2014 10:02 am) - When a couple that ran a Marietta, Georgia-based securities brokerage went bankrupt late last month, it caused a ripple effect. One of the people who expects to get soaked is Bruce Wilkerson, a former tackle for the Green Bay Packers who is trying to recoup about $650,000 from the couple and their firm, Resource Horizons Group LLC.

Also likely to never see a dime are investors who were awarded $3.9 million by an arbitration panel in June, say some investors' lawyers. The allegations in that case were similar to those in other cases against Resource Horizons and its owners: a broker at the firm ran a scam on the side and defrauded them. Resource Horizons and its owners failed to supervise the broker, the cases allege. The firm does not have enough cash on hand to pay the $3.9 million award, said its lawyer.

Investors' lawyers - who are typically paid a share of the proceeds their clients win in arbitration rulings - are up in arms over these types of cases, where investors are left stranded after firms and brokers file for bankruptcy after a big ruling goes against them.

Resource Horizons itself has not filed for bankruptcy protection, though of course it could, say some securities lawyers.

The firm still is licensed but not allowed to place trades because the cash it has on hand after the $3.9 million award falls short of the Financial Industry Regulatory Authority's requirements, said Alan Wolper, who represents the firm and its owners. He did not know the firm's plans for a possible bankruptcy, he said.

The Public Investors Arbitration Bar Association (PIABA), whose members are lawyers who represent investors, wants an industry requirement that would force brokerages to buy insurance to cover unpaid awards.

PIABA's new president, Joe Peiffer, has set the issue as a priority for the coming year, weeks after FINRA, Wall Street's industry-funded watchdog, decided that it cannot force brokerages to carry insurance. Insurance could be "prohibitively high" and perhaps difficult to obtain at all, especially among riskier firms, a FINRA spokeswoman said.

It is easy to surmount those roadblocks, said Peiffer, who became PIABA president on Oct 24. For example, firms that are uninsurable or cannot afford premiums should not be able to sell risky products, such as privately issued securities, which often lead to arbitration rulings against them, Peiffer said.

Brokerage firms and brokers failed to pay $50 million in awards to customers in 2012, the latest year for which FINRA data is available. In 2011, unpaid awards totaled $51 million, or about 11 percent of all awards. FINRA, the brokerage industry's private regulator, oversees 4,135 firms.

Many unpaid awards are against small, independent firms that typically are allowed to keep modest amounts - sometimes as little as $5,000 - on hand under U.S. Securities and Exchange Commission rules. Arbitrators have also ruled against individual brokers who then left the industry without paying.

PIABA expects to publish a report about the problems in early 2015, which the group hopes will illuminate the public and lawmakers, Peiffer said. "Nobody I've ever talked to outside of FINRA staff knows that brokers can operate with $5,000 in the bank and no insurance," Peiffer said in an email.

Still, that is likely too late for investors like Wilkerson who had to sell his home and work extra shifts at an aluminum plant since losing his money, he said.

The Millers did not return a call requesting comment.

Wolper, their lawyer, dismisses PIABA's interest in an insurance requirement, saying it would serve the interest of the group's own members: getting paid by taking a cut of the sums investors would receive. (Additional reporting by Emily Flitter in New York; editing by Linda Stern and Matthew Lewis)