Sept 12 (Reuters) - Direct Markets Holdings Corp said its broker-dealer unit informed the Financial Industry Regulatory Authority that the unit was no longer in compliance with regulatory capital rules and would cease conducting its securities business.
The unit, Rodman and Renshaw LLC, would conduct only liquidating transactions till it regained compliance with the U.S. Securities and Exchange Commissions net capital rules, the company said in a regulatory filing.
The unit was exploring options, including terminating its broker-dealer license and sale of assets to an entity controlled by its founder Michael Vasinkevich.
The firm had said last month that it had experienced an increase in the scope and amount of information requested by the FINRA related to the various aspects of its broker-dealer business.
Direct Markets was previously Rodman and Renshaw Capital Group Inc, a small investment bank. It changed its name in May to focus on developing financial technology applications and operating the DirectMarkets platform.
The company said it believed the new focus on technology would generate more value than its legacy investment bank-focused strategy.
Rodman and Renshaw was fined $315,000 in August by FINRA for supervisory and other violations after the regulator found that the firm’s research analysts were soliciting investment banking business.
Direct Markets had said in August its unit had net capital of $2.2 million, more than its required net capital of $1.0 million, as of June 30.
Direct Markets shares closed at $0.14 on the Nasdaq on Wednesday.