Exclusive: Advanced Equities shutting down

November 12, 2012, 11:18 PM UTC

FORTUNE — Controversial Chicago-based investment firm Advanced Equities is shutting down broker-dealer operations, Fortune has learned.

Sources say that many Advanced Equities brokers were told on Friday that today would be their last day, and many have already begun searching for new employment. A staff meeting is scheduled for later this afternoon. It is currently unclear what will become of the parent company that holds the broker-dealer, or of several AE offerings that are currently in process.

Advanced Equities is best known for helping to raise large rounds of financing for private companies backed by well-known venture capital firms like Kleiner Perkins, Khosla Ventures and New Enterprise Associates.

In September, Advanced Equities was charged with misleading prospective investors on a pair of private placements for private fuel cell maker Bloom Energy. Among the lies were that the company had more than $2 billion in order backlogs (it only had $42 million) and that it had a $1 billion order from a national grocery store chain (it was only $2 million). AE settled the charges by, among other things, agreeing to pay a $1 million penalty.

I have also heard rumors that AE recently received subpoenas related to its fundraising efforts for another well-known cleantech company, but have not yet been able to get confirmation.

Calls to AE co-founder and chairman Daubenspeck have not yet been returned. George Middlemas, an AE board member and general partner with AE shareholder Apex Venture Partners, declined to comment.

More on this to come later this afternoon…

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