Legent Clearing about to be bought?

Speculation rampant that clearing firm will be acquired by PE outfit

Jun 2, 2011 @ 3:56 pm

By Jessica Toonkel

Rumors are swirling that Legent Clearing LLC is about to be bought by private-equity investors — just months after a previous attempt to buy the firm failed.

In June 2010, United Western Bancorp Inc. said that its subsidiary United Western Bank was buying Legent for $13 million. But in January, the Federal Deposit Insurance Co. closed the $2 billion bank after a long struggle by the bank to raise capital.

Now, speculation that Legent has a buyer has some of the clearing firm's customers worried.

“What makes me uneasy is that every couple of months, there are a new set of firms trying to buy them,” said one broker, who had heard about the potential acquisition and asked not to be identified. “It makes it hard for us to recruit.”

Dave Jarvis, general counsel for Legent, declined to comment about a possible sale, beyond saying: “We are a private company, and if we have an announcement to make, we will.”

InvestmentNews has been unable to identity the potential buyer. Still, if the rumors are true and the private-equity firm is financially strong, an acquisition would be good news for Legent and its customers, said Alex Montano, managing director of the corporate finance group at C.K. Cooper and Co., an investment bank that uses Legent.

“The last buyer didn't exactly give me a warm and fuzzy feeling,” Mr. Montano said.

According to InvestmentNews data, Legent ranked as the 14th largest clearing firm in the industry (See full chart here), with 80 broker-dealer clients.

Four of those clients were, National Securities Corp., First Midwest Securities Inc., vFinance Investments Inc., MidAmerica Financial Services Inc., according to the April InvestmentNews independent broker-dealer survey. (View that chart here.)

Given Legent's small size, it isn't surprising that the firm once again would be a target, said Peter Hoffmann, chief financial officer at Perrin Holden & Davenport Capital Corp., a firm that has used Legent for 15 years.

“They are a small clearing firm, so you either get bought or you have to buy,” said Mr. Hoffmann, who said he hadn't heard the latest speculation. “If this rumor is true, it should be good for us because it means [Legent] won't go belly up.”

But Mr. Jarvis dismissed concerns about Legent's financial situation, saying that because the clearing firm is small, it doesn't have to pay the kinds of infrastructure costs that some of its competitors do.

“I don't think for a minute that we have a need to transact in anything,” he said.


What do you think?

View comments

Most watched


Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.


Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.

Latest news & opinion

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime

4 strategies for Roth conversions

There's never been a better time to do a Roth conversion, and here are several ways to go about it.

Cetera latest to be hit with data breach of personal information

Company is offering clients complimentary, two-year membership to an identity theft protection and credit monitoring service.


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.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print