Sterne Agee sues former CEO Holbrook

In complaint, regional brokerage says former executive "wasted" corporate assets for his own benefit

Dec 11, 2014 @ 1:01 pm

By Bruce Kelly

Sterne Agee Group Inc. fired its former chairman and CEO, James Holbrook Jr., in May for allegedly misusing company assets. Now, the firm is suing him for the same reason: allegedly using company assets and resources that were not in Sterne Agee's interest but were, instead, in Mr. Holbrook's personal interest.

Mr. Holbrook allegedly “wasted [Sterne Agee Group's] corporate assets and used them for his own personal benefit,” according to the complaint.

The Sterne Agee compliant, however, does not state that Mr. Holbrook's alleged actions harmed or damaged any customer. Rather, he allegedly breached his duty of care to Sterne Agee “and took actions beyond how a reasonable person might act” while he was chairman and CEO.

“The termination of the former CEO Holbrook was not an action by any individual executive of the holding company, but was an action taken by the Sterne Agee Group board of directors after learning of a federal criminal investigation into possible misconduct of Mr. Holbrook,” wrote Sterne Agee spokesman Michael Goodwin, in an email to InvestmentNews. “This action addresses Mr. Holbrook's misappropriation of corporate assets for his own personal benefit, and follows both federal and internal investigations into Mr. Holbrook's use of holding company assets. Sterne Agee has filed lawsuits to recover property, compensation, damages and costs related to Mr. Holbrook's actions. Mr. Holbrook not only failed to observe proper governance standards, but also failed to disclose to the board his interest in transactions at issue in the lawsuits.”

Bruce Gordon, Mr. Holbrook's attorney, did not return a call to comment.

(More: Sterne Agee wants to remove Holbrook from board)

Sterne Agee's lawsuit is the latest step in actions the brokerage has taken this year against Mr. Holbrook. According to his BrokerCheck report, Mr. Holbrook was discharged by Sterne Agee Group in May. At the time, he was under internal review for the potential misuse of holding company assets. Mr. Holbrook is also facing investigations from the Departments of Treasury and Justice, according to BrokerCheck.

Eric Needleman in May took over as chairman of Sterne Agee Group Inc., the holding company. He also became CEO of Sterne Agee & Leach Inc., a broker-dealer subsidiary. Also in May, Sal A. “Joe” Nunziata was named CEO and president of Sterne Agee Group.

According to the lawsuit, filed by Sterne Agee Group last week in Jefferson County, Ala., circuit court, Mr. Holbrook allegedly used corporate credit cards for personal expenses, company resources on sporting events and aircraft owned by a Sterne Agee subsidiary for personal trips for himself, friends and family. He also allegedly made various investments on behalf of Sterne Agee in a handful of companies that purchased fishing craft, a ski chalet in Utah, a luxury condominium in Key Largo, Fla., and shares in an Alabama hunting club.

He also allegedly created the terms of his compensation, according to the complaint.

“At times, without appropriate approval from [Sterne Agee's] board of directors, [Mr. Holbrook] decided the amounts [of compensation] he received” from Sterne Agee, according to the complaint. “Moreover, on one or more occasions, [Mr.] Holbrook set the terms of his own compensation, employment and benefits without approval” from Sterne Agee's board of directors, the complaint alleged. Those amounts were “excessive,” according to the complaint.

Based in Birmingham, Ala., Sterne Agee is a large, privately held regional brokerage and investment bank. Sterne Agee Wealth Management has over 750 employee and independent contractor reps as well as $26 billion in client assets, according to the company's website.


What do you think?

View comments

Recommended for you

Upcoming Event

Mar 26


Huntington Beach Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Featured video


Why advisers are pessimistic about the economy

Deputy editor Bob Hordt and senior research analyst Matt Sirinides discuss a recent InvestmentNews survey of advisers, most of whom see a recession ahead before the next presidential election.

Latest news & opinion

John Bogle, Vanguard founder, dies at 89

The pioneer of low-cost, passive investments died of cancer.

10 biggest breakaways of Q4

Echelon Partners lists the 10 biggest adviser moves out of wirehouses during last year's final quarter.

6 biggest RIA acquisitions of 2018

As M&A involving registered investment advisers hit another record last year, these six deals topped the list

Anatomy of an annuity buyout offer

Readers are invited to comment on whether the columnist should keep or ditch her Ohio National VA contract

Factions emerge in OneFPA overhaul

Critics fear the FPA is trying to take money and power from local chapters, which officials and proponents call overblown.


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 It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print