Newbridge Securities to be bought by foreign wealth management firm

London-based European Wealth Group is acquiring the U.S. independent broker-dealer, which has about 200 reps and advisers

Oct 11, 2017 @ 2:22 pm

By Bruce Kelly

+ Zoom

Another independent broker-dealer is changing hands.

This time, Newbridge Securities Corp., a mid-size firm with about 200 reps and advisers, will be acquired by a foreign firm, the London-based European Wealth Group. The deal was announced jointly Tuesday.

Terms of the deal were not disclosed.

"We are ambitious to grow both organically and dynamically by acquisition," said Marianne Ismail, CEO of European Wealth Group, in the announcement. "Newbridge presents a unique opportunity to invest in an established, well-positioned and nationally represented company."

Newbridge reported $26.17 million of total revenue in 2016 and a net loss of nearly $488,000.

Leonard Sokolow, CEO of Newbridge Financial Inc., a holding company, did not return a call seeking comment about the acquisition.

Newbridge recently has been the focus of state securities regulators. In July, the Pennsylvania Department of Banking and Securities fined Newbridge Securities $499,000 for failing to supervise a broker in connection with the sales of structured products.

And in 2016, Newbridge Securities was one of seven broker-dealers fined a total of $238,000 by Secretary of the Commonwealth of Massachusetts William Galvin for playing a role in a 2015 proxy fraud committed by the defunct Realty Capital Securities.

The Newbridge deal, which still needs to be approved by regulators and is expected to close by early next year, is the latest in a series of broker-dealer mergers so far this year.

One industry observer noted that the securities industry is getting increasingly difficult for firms that generate revenue from trades and commissions rather than fees. In 2016, 82% of Newbridge's revenue came from commissions, according to a filing with the Securities and Exchange Commission.

Noting its history of regulatory problems, Jonathan Henschen, an industry recruiter who formerly did business with the firm, said the deal "gives Newbridge some breathing room at a time when the regulatory environment is hostile to traditional stock and bond, transactional brokers."

And it's a lousy time to buy into the U.S. brokerage business, he added, with profits steadily declining at many firms for more than a decade.

"There's the unknown of the [Department of Labor] fiduciary rule and questions [about] the transactional business model," he said. "So many of those firms have left the business. Is that a viable model?"

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

Ron Carson explains the origins of 'Ronsense'

To take his message to the masses, Ron Carson has launched a "Ronsense," a web series on Twitter that features some of his pearls of wisdom. Learn about how it all started.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

T. Rowe Price steps up its game to serve financial advisers

The Baltimore-based mutual fund giant is more aggressively targeting financial advisers with a beefed-up wholesale crew and placement on custodial platforms.

The most important tax changes for 2018

The Internal Revenue Service issued inflation adjustments to more than 50 tax provisions for 2018.

Shift to Roth 401(k)s 'highly likely' part of tax reform: former Treasury official Mark Iwry

Mandated contributions to Roth accounts would likely only be partial, as opposed to having a full repeal of pre-tax accounts.

E*Trade acquiring custodian Trust Company of America

Discount broker buying second-tier custodian for $275 million.

Another thousand Dow points higher, and investors yawn

Market milestones keep falling like dominoes, with 51 records broken so far this year.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print