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Dings, Marks Bad News for Broker Dealers

FINRA Files Complaint Against Broker Dealer Firm’s Owner

By Bob Pepalis

Dings and marks are a bad thing in any industry, but for broker dealers they could point to bigger problems. Meyers Associates of New York appears to be a prime example of the problems shown by disclosure events.

Financial Industry Regulatory Authority (FINRA) has gone so far as to sue the firm’s owner and CEO, Bruce Meyers, over allegations of improper marketing of SignPath Pharm Inc. The FINRA complaint said that the company has had no revenue, according to a report in Investment News.

Securities Lawyers Blog said that Meyers Associates, through its chief executive, allegedly made exaggerated claims of price performance and omitted facts. Those facts included failing to disclose that Meyers and another firm executive were majority owners in SignPath Pharma.

Meyers has 11 disclosure events on his record at FINRA BrokerCheck, including two that are pending, the blogger said.

A broker dealer can’t make a general solicitation of a private placement or limited partnership. Those securities can be sold to sophisticated investors with whom they have a long-standing relationship. But that wasn’t the case in the SignPath Pharma offering to more than 1,000 email addresses, according to the complaint against Meyers.

Investment News reported in March that 47 Meyers Associates representatives out of the 75 who were registered at the time had some type of disclosure event on their records.

Many firms have some type of disclosure event on their FINRA BrokerCheck reports. But when more than half of the representatives have something on their records and the firm has a record of censures and fines, how can clients build a rapport and trust with their financial adviser?

Do you advise your potential clients to check your record on FINRA’s BrokerCheck? As a client, have you done your own due diligence in checking out your broker’s history?

Posted in: Independent Broker Dealer News

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Broker Dealers Turn to Robo-Advisers to Create Wealth

By Bob Pepalis

Can we automate wealth creation? That’s what robo-advisers are being designed to do.

Broker dealers and independent broker dealers have different ideas about how to use a robo-adviser. Some plan only to have their human financial advisers work with the automated systems. Commonwealth Financial Network CEO Wayne Bloom said last week that his broker dealer firm is considering how to fit a robo-adviser offering with existing human financial advisers. Betterment just announced plans to do this on October 15, 2014.

Others plan for the robo-advisers to reach clients with less money for investments with an aim to grow their business. These “poor” clients would use the robo-advisers to provide the investment advice. They believe the automated systems will allow them to serve a large number of clients that their financial advisers don’t have time to reach for the lower earnings.

FutureAdvisor.com is a good place to look to see what the fuss is about because it offers a free portfolio recommendation and analysis.

The decisions still need to be made by the investor, but how far are we willing to go in removing the human touch? Or is it really needed?

 

 

 

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Ladenburg Thalmann to Acquire Broker Dealer

 

Bob Pepalis

Miami-based firm plans to leave SSN as a stand-alone firm

By Bob Pepalis

Ladenburg Thalmann Financial Services plans to acquire Securities Services Network would bring the firm’s total number of advisers near 4,000. The $45 million purchase also would raise Ladenburg’s client assets to $125 billion and annual revenues just above $1 billion.

 

Under the terms of the acquisition, Miami-based Ladenburg will pay $45 million for the independent broker dealer, consisting of a $25 million cash payment and $20 million of four-year notes, according to a release on the company’s website.

 

“This acquisition further underscores Ladenburg’s commitment to the independent brokerage and advisory industry, which we believe is one of the sweet spots of the financial services industry,” said Dr. Phillip Frost, chairman of the Board of Ladenburg and its principal shareholder. “SSN’s culture, emphasizing support for the success of its advisors and clients, makes it a natural fit for what we are building at Ladenburg.”

 

The acquisition of the Knoxville-based SSN is expected to be completed by the end of this year or early in 2015.

 

Posted in: Independent Broker Dealer News

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