Sterne Agee wants to remove Holbrooks from board

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

Jun 25, 2014 @ 11:08 am

By Bruce Kelly

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.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Behind the scenes of InvestmentNews' Best Places to Work

Benefits and vacation policies are important for hiring top talent, but giving employees a sense of ownership in decision-making is among the most important qualities, editor Fred Gabriel says.

Latest news & opinion

Why we must create a more diverse and sustainable financial planning profession

CEO explains how, why a firm should commit to conscious inclusion.

Pope Francis wants financial advisers to work like fiduciaries

Vatican bulletin admonishes advisers who act against the best interests of their clients.

Wells Fargo sees slowdown in advisers exiting this year

The 2016 banking scandal and public relations fiasco had alienated some of the firm's advisers.

States trying to save DOL fiduciary rule appeal rejection of effort to intervene

California, New York, Oregon ask for rehearing by full 5th Circuit Court of Appeals.

Employees at best places to work focus on the person — and the fun

Employees at best places to work firms focus on the person and fun.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print