Sterne Agee's ousted CEO Holbrook said to face investigation

Probe reportedly looking into misuse of company assets such as airplanes, boats, condos

Jun 23, 2014 @ 12:01 pm

sterne agee, holbrook, investigation, finra, broker
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Sterne Agee Group Inc.'s former chief executive faces a probe into whether he misused company assets such as airplanes, boats, hunting clubs and condominiums, a person with knowledge of the matter said.

The Treasury and Justice departments are examining James Holbrook Jr., who was chairman and CEO until his ouster last month, and his son, William Holbrook, who served as chief operating officer, according to the person, who asked not to be named because the investigation hasn't been publicly announced. Leaders of the Birmingham, Ala., firm sent a memo to staff June 20, telling them an inquiry would be disclosed soon in the former CEO's industry employment record, the person said.

(IN's Bruce Kelly explores the question: Why did Sterne Agee fire its CEO?)

“It's a lot to do about nothing, and the allegations are grossly overstated,”said Bruce Gordon, an attorney representing the Holbrooks. “We're confident the truth will prevail and my clients will be vindicated.”

Sterne Agee, which traces its roots to a securities firm founded in 1901 by former Birmingham Mayor George B. Ward, also opened its own investigation into the Holbrooks' activities, according to the person. Shareholders in the company are set to vote July 3 on whether to remove James and William Holbrook from the board of directors, the person said.

“Under the circumstances, the firm believes it is best for the company that James and William Holbrook resign from their positions on the Sterne Agee Group board of directors,” Carole Miller, an attorney for the company, wrote in an e-mailed statement. “Absent such resignations, the firm plans to hold a shareholder vote to replace the Holbrooks as directors.”

Sterne Agee is cooperating with the inquiry and hasn't been asked to provide anything other than documents, she said.

FIRM'S EXPANSION

Spokesmen for the Justice and Treasury departments declined to comment. There was no mention of a U.S. inquiry in a copy of James Holbrook's employment records on the Financial Industry Regulatory Authority Inc.'s website late Sunday.

Sterne Agee, one of the South's fastest-growing brokerages, has expanded to 1,700 employees from 1,000 four years ago. It overhauled its leadership after ousting James Holbrook, who founded and ran First Birmingham Securities Corp. before it was consolidated with Sterne Agee in 1990.

The new chairman, Eric Needleman, led the firm's fixed-income unit and will remain in New York. He joined Sterne Agee in January 2009 after heading high-yield sales, trading and research at KBC Financial Products and started his career at Lehman Brothers Holdings Inc. Joe Nunziata, who was appointed CEO and president last month, leads FBC Mortgage, which was bought by Sterne Agee.

(Bloomberg News)

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