After having been open since 1947, the year Jackie Robinson first played for the Brooklyn Dodgers, National Securities Corp. told Finra on Monday it was shutting down.
According to the firm's BrokerCheck report, National Securities, which is based in Boca Raton, Florida, and has 574 registered reps and advisers, filed its "termination requested" paperwork with the Financial Industry Regulatory Authority Inc. and has moved its advisers into B. Riley Wealth Management.
The integration of the two firms has appeared to be inevitable for some years. In 2018, B. Riley Financial announced that it was purchasing a large stake in National Holdings Corp., the parent of National Securities Corp., and in 2021 B. Riley said it was buying the rest of the company shares it didn’t already own.
Both National Securities and B. Riley Wealth Management used Fidelity's National Financial Services as a clearing firm, so transferring client accounts was a seamless task, executives said in an interview Friday morning.
The formal announcement of the merger is expected next week, so there will be more details to come, the executives said. But one detail is that the various parts of the enterprise will now operate under the B. Riley brand.
B. Riley Wealth has focused for the most part on hiring employee brokers and financial advisers, while National Securities focused on independent contractor reps. The new firm can move potential hires and recruits in either direction.
"That's what’s most exciting to me," said Charles Hastings, co-CEO of the new B. Riley Wealth Management. He shares the title with Mike Mullen, the former head of National Securities.
The closing of the broker-dealer comes almost a month after Finra sanctioned National Securities for a variety of problems, ranging from artificially influencing the market for securities it had underwritten to negligently omitting to inform clients about GPB Capital Holdings’ inability to file audited financial statements for its private placements on time.
"The Finra settlement dealt with a lot of legacy issues and it was important to close that door prior to the integration with B. Riley," Mullen said.
To settle the matter, National Securities agreed to pay: disgorgement of $4.8 million in net profits it received for underwriting the 10 public offerings; $625,000 in restitution for failing to disclose material information in 2018 to customers who purchased GPB Capital Holdings private placements; and a $3.6 million fine for this misconduct and various other supervisory and operational violations.
Since the credit crisis of 2008, National Securities has reported two dozen disclosure items on its BrokerCheck report, with the $9 million Finra settlement the most recent.
As Commonwealth advisors weigh their futures following the firm’s sale, Summit Wealth Group is charting its own course as an independent RIA with $2.1 billion in assets, moving to SEI's custodian platform.
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