Financial regulator shuts GunnAllen; 400 lose jobs
NEW YORK (Reuters) - The Financial Industry Regulatory Authority's move on Monday to close Tampa, Florida-based broker-dealer GunnAllen Financial Inc has left more than 400 financial advisers searching for a new firm.
FINRA warned GunnAllen on Friday that it had fallen below its mandatory net capital requirements, a person familiar with the situation said. The firm is no longer permitted to trade in its client accounts and the assets continue to be held by the firm's third party custodian.
A FINRA spokesman declined to comment. As a matter of course, when a firm is shuttered by FINRA, the regulator launches an investigation.
According to Investment News, which broke the story early on Monday, GunnAllen is facing a raft of investor lawsuits related to the activities of former GunnAllen adviser Frank Bluestein, who allegedly operated a $250 million Ponzi scheme.
Mindy Diamond, a Chester, New Jersey-based industry recruiter, said her firm has received a number of calls from GunnAllen advisers looking for a new home. But she said most have low production figures and their options are limited.
"Most of them aren't going to end up at a Wells Fargo or Raymond James. They're looking at second tier firms or lower," she said.
Diamond said GunnAllen advisers should be working hard to keep their clients from defecting.
"They need to be reassuring clients that their money is safe and they will land somewhere else within a couple days and transfer their assets," she said.
Rich Schwarzkopf, a New York-based recruiter, said GunnAllen advisers are usually heavily transaction based, which is generally not attractive to the bigger firms.
"These guys generate commissions on a low amount of assets and the big firms shy away from that. They want more assets," he said.
Firms fall below their net capital requirements "more often than people think," said Alan Foxman, a securities attorney at Boca Raton, Florida-based Fred Chikovsky & Associates and a former staff attorney at the NASD.
But he added that it is usually smaller firms that face these issues.
GunnAllen did not return calls for comment.
(Reporting by Helen Kearney; editing by Andre Grenon)
- U.S. war veteran released by North Korea returns home |
- South Korea to make announcement on air zone; expansion is anticipated |
- Pro-Europe protesters gather for rally in Kiev
- Pennsylvania newlyweds "just wanted to murder someone together:" police
- Obama defends interim Iran deal, seeks to assure Israel
Nelson Mandela: 1918 - 2013
Reuters looks at the life and times of Nelson Mandela, an icon of peace and reconciliation who came to embody the struggle for justice around the world. Video