Brokers and managers of IFS Securities Inc. are looking for employment elsewhere in the wake of trading losses that could potentially cost the mid-size broker-dealer $10 million.
At the time, the Atlanta firm said it had suffered substantial losses as a result of unauthorized trades by a senior employee, and that it had reported the losses to the Securities and Exchange Commission and the Financial Industry Regulatory Authority Inc.
Now the firm's brokers and advisers are talking to other broker-dealers, and its management is jumping ship to another broker-dealer that is owned by the same executive and investor who owns IFS Securities, Alexys McKenzie.
IFS brokers have told brokerage executives at other firms that they can no longer make trades for clients at IFS. The only trading activity allowed is to liquidate positions for customers, according to these executives.
According to its BrokerCheck profile, IFS Securities is still open.
IFS Securities has 160 financial advisers, according to its website. It also operates an advisory firm, IFS Advisory, which has $600.7 million in client assets, according to its Form ADV.
[Recommended video: Financial planning wasn't even a thing 50 years ago]
Three brokerage firms that have had talks with either IFS advisers or management about moving include Cabot Lodge Securities, National Securities Corp. and Kovack Securities Inc., according to executives and recruiters.
"Cabot Lodge is looking at hiring a handful of former IFS advisers, and doing everything we can to support them and move them over," said Craig Gould, president and CEO of Cabot Lodge.
Michael Mullen, CEO of National Securities, said that his recruiting team may be talking to one of two advisers from IFS, but that there are no discussions underway about moving over large teams of advisers.
Brian Kovack, the president of his eponymous firm, declined to comment. Mr. McKenzie did not respond to requests for comment.
Meanwhile, a number of executives with IFS are jumping as a group to another broker-dealer, San Blas Securities, which until recently was called IFS Capital Markets, according to its BrokerCheck profile. Mr. McKenzie controls San Blas through his majority ownership of IFS Securities.
For example, CEO of San Blas, Daniel Padilla Jr., is registered at IFS Securities but was newly registered with San Blas in the second half of August, after the report of the $10 million loss.
Likewise, the chief technology officer at San Blas, Kristiaan Sheedy, is registered at both San Blas and IFS, with the registration to the former firm also occurring in the second half of last month.