FSC Securities sued by former branch manager after alleged buyout attempt

Nov 5, 2009 @ 3:47 pm

By Bruce Kelly

A former branch manager who headed one of the largest groups of reps at FSC Securities Corp. is suing the broker-dealer after what he claims was a thwarted and contentious attempt to buy the business from parent AIG Advisor Group earlier last year.

Alan Mooney, a managing field associate with FSC until last month, filed the claim in October with the Financial Industry Regulatory Authority Inc.

In the lawsuit, he alleges that FSC “systematically and intentionally attempted to destroy” his network as “punishment” for the manager's attempt last year to organize a group of other branch managers to buy the broker-dealer from AIG.

In October 2008, the future of the three broker-dealers in the AIG Advisor Group – FSC, Royal Alliance and SagePoint Financial Inc. – was thrown into question as American International Group Inc. imploded. Ed Liddy, then AIG's chief executive, said the company would sell off assets, including the broker-dealer network, in an effort to repay the federal government for its $170 billion bailout.

Mr. Mooney, who is based in Ohio, oversaw a group of 80 reps and advisers and was responsible for as much as 10% of all gross dealer commissions at FSC.

“When FSC found itself for sale, and in dire economic straits as part of the broader collapse of its parent company AIG, [Mr. Mooney] attempted to organize a group of [managers] to purchase and rescue the company which would have provided much needed capital to AIG,” the lawsuit says.

“These efforts marked [Mr. Mooney] as a potential rival to FSC's management, which apparently had formulated its own competing acquisition plans,” the claim alleges. According to the claim, FSC has since broken its agreement with Mr. Mooney, attempted to recruit reps from Mr. Mooney's network, and withheld recruitment bonuses and other income.

FSC chief executive Mark Schlafly denied Mr. Mooney's claim.

The “claim is wholly meritless,” Mr. Schafly wrote in an e-mail to InvestmentNews. “To our knowledge, Mr. Mooney never made a formal bid to purchase FSC; had he done so he would have been directed to the appropriate investment banking entity.”

Mr. Schafly continued: “Furthermore, our decision to end our relationship with Mr. Mooney took place after months of careful deliberation: we concluded that Mr. Mooney's business philosophy was not aligned with ours. We subsequently worked to afford Mr. Mooney the smoothest possible exit from our firm and worked diligently to ensure minimal interruptions to his practice, staff, and especially his clients.”


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