Sterne Agee confirms CEO was fired after investigation report

But company says board was already discussing replacing Holbrook, son

Jul 8, 2014 @ 12:01 am

By Bruce Kelly

Sterne Agee Group Inc. on Monday confirmed that the decision to fire its former chief executive, James S. Holbrook, came after the firm was notified by federal investigators that he was the target of an investigation.

“The firm was notified that Mr. Holbrook is the subject of an investigation” by the Treasury Department and Justice Department, according to Mr. Holbrook's BrokerCheck report, on which broker-dealers reveal information including federal investigations. “The investigation relates to the possible misuse of holding company assets but the firm cannot confirm the full scope or subject matter of the investigation.”

According to the BrokerCheck report, Mr. Holbrook was under internal review by Sterne Agee for the potential misuse of holding company assets when he was fired.

Mr. Holbrook was fired at the end of May, replaced by Eric Needleman, who also was appointed CEO of Sterne Agee & Leach, one of the firm's broker-dealers. Mr. Holbrook's son, Billy Holbrook, Sterne Agee Group's chief operating officer, and an unknown number of other executives also were dismissed.

Last month, Bloomberg News reported that Mr. Holbrook was facing such a federal investigation, attributing the investigation to an unnamed source.

Mr. Holbrook's attorney, Bruce Gordon, declined to comment on the report on BrokerCheck.

Sterne Agee's board had been discussing the need for a new direction and leadership for months, well before any allegations of misconduct were raised.

“Although the Holbrooks' termination was likely a fait accompli by the time members of the group board were made aware of the investigation, learning of the investigation reinforced to the group board the need to accelerate change,” Sterne Agee spokesman Mike Goodwin, wrote in an e-mail to InvestmentNews. “The group board acted promptly to install new and experienced leadership and launched its own internal investigation.”

Last week, the company was scheduled to hold a special shareholders meeting to vote on removing the Holbrooks from its board of directors.

Meanwhile, Sterne Agee also faced further embarrassment last month when it had to inform its clients that an employees had lost a firm-issued laptop computer with client information that may have included personal information such as name, address, account number and Social Security numbers, according to a letter to clients dated June 27. The data did not include date of birth, account holdings, account passwords and access codes.

“The company is unaware of any customers whose personal information has been accessed as a result of the loss,” Sterne Agee said in a statement. “Protection of personal information is critically important to us and to our customers. In an abundance of caution, we are providing customers with extended identity theft protection services and identity theft insurance.”

The shake-up at Sterne Agee came 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.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

How did we pick this year's 40 under 40 winners?

Special projects editor Liz Skinner and editor Fred Gabriel say efforts to improve the financial advice industry and the promise of future success factored heavily in candidate selection.

Latest news & opinion

Merrill re-evaluates commission ban in retirement accounts

The wirehouse's wealth management group announces a fresh look at the ban now that the DOL rule is on the brink of death.

10 biggest retirement mistakes

Adhere to enrollment deadlines and distribution rules or pay a hefty penalty.

DOL fiduciary rule on brink of death as key deadline passes

Justice Department didn't petition the Supreme Court to rehear the case. A mandate from the 5th Circuit would finally lay the fiduciary rule to rest.

Finra to overhaul broker information system, cut compliance costs for broker-dealers

The move is intended to cut compliance costs for firms as well as make the registration and disclosure process more efficient.

SEC rule proposal doesn't include 401(k) sponsors in 'best interest' advice

Plan sponsors are left out of the equation because they don't appear to fall within the definition of "retail" investor, legal experts say.

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