After bankruptcy, Cetera Financial Group looking to sell Legend Equities Corp.

After bankruptcy, Cetera Financial Group looking to sell Legend Equities Corp.
Cetera CEO Larry Roth says the company is shedding the RCS Capital name, officially putting the Nicholas Schorsch era behind it.
SEP 02, 2016
Cetera Financial Group, off to a fresh start Wednesday after its parent company emerged from bankruptcy, is likely to sell its broker-dealer Legend Equities Corp., which focuses on retirement plans for teachers and employees of tax-exempt organizations. Cetera's former parent company, RCS Capital Corp., or RCAP, entered into a pre-packaged Chapter 11 bankruptcy in January. RCAP was formerly controlled by Nicholas Schorsch, who has no role in the new company. The holding company that now owns Cetera is called Aretec, which is Cetera spelled backwards. The firm is now owned by its former creditors, which include large financial institutions such as Fortress Investment Group, Carlyle Investment Management and Eaton Vance Management. The sole focus of Cetera is independent broker-dealers and their financial advisers. The company performed a strategic review of Legend during the bankruptcy period and concluded that it was best to explore selling it, said Larry Roth, who is remaining as the CEO of Cetera, which currently consists of 10 broker-dealers and 9,000 advisers. Cetera is beginning to consolidate its broker-dealer network as a way to reduce costs. “Legend is a very well-respected firm that focuses on the 403(b) market and school teachers,” said Mr. Roth. “It's likely to be spun off. That in no way reflects a lack of respect for its business.” Other highlights of Cetera's new start include a $150 million capital infusion into the company by the new owners and the appointment of Robert Moore as non-executive chairman of Cetera's board, according to Mr. Roth. “It's a relief to be through the bankruptcy process and clearly focused on the future,” Mr. Roth said. “I am thankful that the Cetera advisers have continued to have confidence in the business and the executives who serve them.” (More: Appointment of former LPL exec Robert Moore to Cetera's board could help embattled B-D restore its brand) Mr. Moore resigned as president of LPL Financial in March 2015. He was expected to take over as CEO of LPL from Mark Casady, but left the company after he was passed over by LPL's board. Mr. Moore is currently the CEO of Legal & General Investment Management America, an institutional money manager. He will continue in that role while serving as Cetera's non-executive chairman. The company expects to focus on growth initiatives in the near future, Mr. Roth said. “The management team identified strategic projects in our budgets going forward,” he said. “We are reviewing with Robert and the board. The goal is to help advisers better serve their clients and manage businesses in this ever-changing environment, particularly around the new Department of Labor fiduciary rule.”

Latest News

JPMorgan tells fintech firms to start paying for customer data
JPMorgan tells fintech firms to start paying for customer data

The move to charge data aggregators fees totaling hundreds of millions of dollars threatens to upend business models across the industry.

FINRA snapshot shows concentration in largest firms, coastal states
FINRA snapshot shows concentration in largest firms, coastal states

The latest snapshot report reveals large firms overwhelmingly account for branches and registrants as trend of net exits from FINRA continues.

Why advisors to divorcing couples shouldn't bet on who'll stay
Why advisors to divorcing couples shouldn't bet on who'll stay

Siding with the primary contact in a marriage might make sense at first, but having both parties' interests at heart could open a better way forward.

SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives
SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives

With more than $13 billion in assets, American Portfolios Advisors closed last October.

William Blair taps former Raymond James executive to lead investment management business
William Blair taps former Raymond James executive to lead investment management business

Robert D. Kendall brings decades of experience, including roles at DWS Americas and a former investment unit within Morgan Stanley, as he steps into a global leadership position.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.