Sterne Agee wants to remove Holbrooks from board

Schedules a shareholder vote, discloses ongoing investigations of former father-son executive team

By Bruce Kelly

Jun 25, 2014 @ 11:08 am (Updated 2:54 pm) EST

Sterne Agee Group Inc., Sterne Agee & Leach, James Holbrook, independent broker-dealers, fraud

Sterne Agee Group Inc. wants to remove its former chief executive, James Holbrook Jr., and his son, Billy, the firm's former chief operating officer, from its board of directors.

In a letter on Monday to its shareholders, the company's executive committee said that the privately held Sterne Agee Group has “taken the unusual step of scheduling the July 3 special shareholders meeting to vote on the removal of the Holbrooks because we believe their removal is critical for the future of the company.” The letter was first reported by the website al.com.

Sterne Agee Group, a holding company that owns a number of broker-dealers and a large clearing operation, was recently “advised of an investigation into possible misconduct on the part of [its] former CEO, James S. Holbrook Jr., and former chief operating officer William K. Holbrook,” according to the letter. “Although it is impossible for Sterne Agee to determine the full scope of the investigation, it appears, at a minimum, that the investigation relates to the use of holding company assets (non-customer), such as airplanes, boats, hunting clubs and condominiums by Messrs. Holbrook and Holbrook,” the letter stated.

“Sterne Agee is deeply disappointed with the conduct issues raised by the investigation of the Holbrooks,” according to the letter. “The preliminary investigation suggests that, under the corporate leadership of the Holbrooks, the company functioned as a matrix that was largely autocratic and nontransparent with the Holbrooks exercising almost complete control over the information flow or lack thereof.”

Kelly Bolvig, associate general counsel of Sterne Agee, confirmed in an e-mail to InvestmentNews that the letter reported by al.com appeared to be a copy of what was sent earlier this week to Sterne Agee's stockholders.

Bruce Gordon, a lawyer for James Holbrook, did not return phone calls seeking comment Wednesday afternoon.

Sterne Agee's board is seeking to remove the Holbrooks as directors more than a year after a former chief financial officer, Brian Barze, filed a complaint against James Holbrook and the company, alleging fraud, breach of contract and defamation at Sterne Agee.

Mr. Holbrook was fired at the end of last month, replaced with Eric Needelman as chairman, who also was appointed CEO of Sterne Agee & Leach, one of the firm's broker-dealers. His son and an unknown number of other executives also were dismissed.

After that, the company made no mention of potential misconduct by James Holbrook as a reason for the change in management. Instead, the company said that “the executive leadership change had been under consideration for months” and that “it was not the result of a single event.”

“The board made a choice between the vision new management offered and vision of the old management,” Ms. Bolvig said earlier this month in a statement to InvestmentNews.

In the letter to its shareholders, the company's executive committee does not say which federal or local agencies are investigating the Holbrooks. The company is fully cooperating with the inquiries, hasn't been asked to provide anything other than documents and has launched its own preliminary investigation, according to the letter.

  @IN Wire

Jul 23 09:00PM
?What have you done for me lately?? http://t.co/SHO6gtVyld
Jul 23 08:43PM
The retail money fund houses are clearly happy. Fidelity: "a reasonable balance" Vanguard: "rules preserve integrity of money funds"

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