It's been a good year for publicly traded brokerage firms — but not all

Shares of LPL, Raymond James and Ameriprise are among those outperforming their benchmark, while Oppenheimer Holdings is down by double digits

Sep 13, 2017 @ 2:40 pm

By Bruce Kelly

Wall Street's expectation of a pullback in securities regulation by the Trump administration and a delay or outright repeal of the Department of Labor's fiduciary rule has launched a rally this year in brokerage stocks — at least for most of them.

LPL Financial Holdings, the nation's largest indepedent broker dealer, has seen its shares climb 34% this year, and shares of Raymond James Financial Inc. are up 12.5%. Ameriprise Financial Inc., which also has large insurance and asset management businesses, has seen its share price increase 24.2%, while shares of Morgan Stanley, an investment bank that derives 40% of its revenue from wealth management, have increased 9.2%.

The Financial Select Sector SPDR Fund, a $24.4 billion ETF, was up 6.7% for the year through Wednesday morning.

Underperformers among brokerage stocks include Ladenburg Thalmann Financial Services, whose shares are up 3.3% for the year, while Stifel Financial Corp.'s are down 4.2%. Neither, however, come close to the dismal performance of Oppeneheimer Holdings, whose shares are down 13.4%

A spokeswoman for Oppenheimer, Jacqui Emerson, did not return a call to comment.

The firm's history of compliance problems and fines continues to hurt its prospects, said Danny Sarch, an industry recruiter. In particular, he pointed to Oppenheimer's $20 million fine and settlement with the Securities and Exchange Commission in 2015 over penny stock trading as still tarnishing its reputation. The former head of its private client group later that year was barred by the SEC from acting as a supervisor due to penny stock sales.

"Oppenheimer for years compromised its compliance standards and suffered accordingly," Mr. Sarch said. "More recently, the firm has tried to clean up its act. But it's still seen as a place for advisers who have no other choice and have to go there, as opposed to a place where advisers want to go."

With 1,158 financial advisers, Oppenheimer has 94 offices in 24 states, according to its most recent quarterly report from July. The company reported a loss of 10 cents per share for the second quarter of this year.

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