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Small Independent Broker Dealer, Newport Coast Securities is Closing

WestPark Capital CEO says he’s adding some brokers from Newport Coast Securities, which he said is closing

Richard Rappaport says WestPark is being selective in whom it hires from Newport Coast

Investment News, Bruce Kelly reported on July 28, 2016 – a small independent broker-dealer, Newport Coast Securities Inc., is closing, according to the head of another broker-dealer that has an agreement to acquire some of its 109 registered reps. Richard Rappaport, the owner and CEO of WestPark Capital Inc., said Newport Coast was closing but he did not know why it was shutting down. Mr. Rappaport said Newport Coast and WestPark had been in merger discussions for about a year, adding that it was the first acquisition by his firm. Joseph Mangiapane, who owns the Newport Coast’s parent, Rubicon Financial Inc., and is also registered with Newport Coast, declined to comment.

Mr. Rappaport said WestPark is treading lightly when it comes to hiring the Newport Coast brokers. An InvestmentNews review of the firm’s employment roster showed that a large percentage, 63%, have at least one “disclosure event” on their Financial Industry Regulatory Authority Inc. BrokerCheck reports. That’s far above the industry norm. According to Finra, just 12% of the 640,000 registered reps, executives and back office employees of securities firms have at least one compliance mark, known as a “disclosure event,” on their records. Mr. Rappaport stressed that WestPark had no intentions of hiring Newport Coast brokers with ugly employment histories. “We signed an agreement (with Newport Coast) to acquire some of the brokers in an asset transaction and [we’re] doing normal due diligence on them,” Mr. Rappaport said, including using an outside firm to perform background checks on the brokers and running each broker under the review of a senior management committee at the firm.

The BrokerCheck profiles of the 15 former Newport Coast brokers who moved to WestPark at the start of the week bear Mr. Rappaport out. Nine have zero or one “disclosure event” on their BrokerCheck profiles, and none has more than four. Several Newport Coast brokers have large numbers of tax liens and judgments during their years working in the securities industry. Critics say brokers with problems paying taxes are a significant warning for investors; if a broker cannot adequately handle his own finances, how can he manage client money properly? Read More>>

Posted in: Independent Broker Dealer News

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