Troy-based Leonard & Co. Inc., which bills itself as Michigan's largest independent financial brokerage, is quitting that business.
Its president and CEO, Dan French Jr., has formed a new company, D.B. French & Co. LLC, which will offer brokerage services to existing customers.
At least one of Leonard & Co.'s two investment banking divisions is also leaving the firm, and it appears the second is, as well. It is unclear whether the company, which also provides financial planning and wealth management services, will remain in business.
"We will be prepared next week to talk with you in depth about our changes," French wrote in an email. "I can tell you that Leonard & Company will be withdrawing as a broker dealer under the supervision of FINRA (Financial Industry Regulatory Authority).
"I and most of the brokers have joined or will be joining us as we connect with a nationally respected broker dealer to continue to service our customers without interruption."
It was unclear how many of Leonard & Co.'s employees and brokers will be joining French.
Leonard & Co. was founded in 1989 by the late Donald Leonard. It has offices in Birmingham, Grosse Pointe Farms, the northeast Michigan community of Ossineke, Saginaw, Sterling Heights, Florida and New York.
Quarton Partners LLC has operated as a division of Leonard & Co. since Andre Augier, Brian Dragon and Robert Parker formed the Birmingham-based investment banking firm in 2010, and it will continue in business, said Augier, a managing director.
Quarton is helping Auburn Hills-based Energy Conversion Devices Inc., the maker of solar-cell panels now in bankruptcy proceedings, divest itself of its business units.
"I don't want to speak for Leonard & Co. What I can tell you is we transferred our dealer broker license to a new group, and we anticipate making an announcement next week," Augier said Friday. "We had forewarnings something was happening with Leonard and Co."
Augier said he couldn't say who the new group was because documents haven't been signed yet.
"We're doing better than ever. This won't affect us," he said.
Quarton was formed in the aftermath of the demise of Detroit-based W.Y. Campbell & Co. after a tiff with its parent company, Dallas-based Comerica Inc. When negotiations for employees to buy the firm broke down, they quit.
Leonard Capital Markets is another investment banking division at Leonard & Co. A message purporting to be from Gregory Buck, Leonard Capital's president, was being circulated by email through the investment community Friday.
The email said that Leonard and Co. no longer would support the investment banking firm's practice and that it would need to associate with another broker dealer, "preferably on an independent basis. Our practice focuses on strategic partnerships, sell sides and private placements of debt/equity to institutional investors, and our industry focus includes software, medical, technology, auto and transportation.
"You can learn more about our practice at www.leonardcapitalmarkets.com. Let me know if you have interest."
The message contained Buck's email address and phone number.
Buck didn't return a call from Crain's asking for comment or to verify the message's authenticity.
This month, a lawsuit against Leonard & Co., French, Leonard principal Wendy Leonard and board members and officers of the now-defunct Community Central Bank Corp. of Mt. Clemens was filed in U.S. District Court in Detroit over the private placement of $2.4 million of stock in 2009.
That suit alleged that Leonard & Co. should have known that buying stock in the troubled bank was a bad investment. It was filed by Bloomfield Hills attorney Norman Yatooma on behalf of his father-in-law, Timothy Mayer, a dentist who was the largest purchaser of stock in the placement -- $700,000 worth.
The Community Central stock became worthless when state and federal regulators shut down the bank in April 2011.
A previous suit over the stock sale was filed in April by the Grosse Pointe Park law firm of Boyle Burdett PC, which was recruited by French to file the suit on behalf of his customers.
Partner Eugene Boyle Jr. said that he decided not to sue Leonard & Co. because it had done well by its customers and that it was the bank officers who were at fault.
Both suits have been assigned to U.S. District Judge Bernard Friedman.
After the first suit was filed, French told Crain's that bank officials had deceived Leonard & Co.
"The true facts were not made known at the time of the offering," he said. "And if the facts had been known, participation in the offering would not have occurred. There were facts that were not shared with us."
French said Friday that his departure has nothing to do with the lawsuits.
(This story was reported by Crain's Detroit Business, a sister publication of InvestmentNews)