A Hawai'i securities broker is among 10 people being charged with fraud by the Securities and Exchange Commission for allegedly representing risky mortgage-backed investments as being safe when they were not.

Travis A. Branch of Kailua was among former brokers who worked for now defunct Brookstreet Securities Corp., a California brokerage that offered a range of investments, including collateralized mortgage obligations.

The SEC sued Branch, 54, and nine others Thursday, asking for penalties and repayment of gains. The SEC said Brookstreet customers' losses totaled more than $36 million when mortgage-based investments collapsed.

Meanwhile, the Brookstreet brokers collected $18 million in commissions and salaries related to Collateralized Mortgage Obligations, or CMOs. Branch collected $481,895 of CMO commissions over a four-year period.

"The brokers enriched themselves with millions of dollars in commissions and salaries while the investors suffered millions of dollars in losses," the SEC alleges.

But Gary Dubin, Branch's attorney, said his client was only a salesman who was marketing what Brookstreet gave him. Branch holds five types of securities licenses, according to the SEC lawsuit.

"This was all known to the regulators," Dubin said.

"Then of course the bubble burst and they looked for scapegoats. Mr. Branch believed in this and he put $1 million of his and his family's money into this. He lost a substantial portion of the $1 million himself."

The SEC complaint, filed in a federal district court in West Palm Beach, Fla., alleges that the brokers did not clearly define the risks to customers before investing their money in the CMOs, a type of investment that's tied to mortgage-backed securities. The most risky of these are only suitable for sophisticated investors.

But the defendants allegedly told clients the CMOs were safe, secure investments that were suitable for retirees and investors with conservative investment goals, the lawsuit said.

The complaint said Branch allegedly represented to some customers that the CMOs were guaranteed by the federal government when only a portion were, and on another occasion talked about how investing in CMOs on margin, or using borrowed money, made sense.

The lawsuit alleges Branch made $481,895 of commissions from 32 CMO customers from 2004 to 2007. Sixteen accounts were on margin and deficits of $3.2 million occurred.

"These brokers disguised the risks of investing in these derivatives of mortgage-backed securities, exposing their customers to substantial losses as the sub-prime crisis emerged," said Robert Khuzami, director of the SEC's Division of Enforcement.

"They disregarded their customers' needs and used deceptive and misleading tactics to enrich themselves at their clients' expense."

Dubin said many people who bought CMOs from Branch are happy with the investments. He said the only ones who were hurt were the ones who bought on margin. Branch had been through several arbitrations over the issue and had all but one dismissed, Dubin said.

"This is a simple dispute involving a premature margin call," Dubin said.

"Branch's position is that he is totally innocent and he is going to fight this."

Gannett News Service reporter John Yaukey contributed to this report.