Securities Service Network Inc. is the latest broker-dealer to pull the plum out of the pie of the defunct
QA3 Financial Corp.
SSN today said it has recruited two large teams of QA3 reps. In total, the firm has 32 commitments from QA3 reps that generate $6 million in fees and commissions, SSN president and CEO Wade Wilkinson said in a statement.
The reps joining SSN come from two teams: Orizon Investment Counsel LLC of Omaha, Neb., which has seven reps, and ESI Financial of Caledonia, Mich., which has 25. Each group produces about $3 million in fees and commission annually, Mr. Wilkinson said. The addition of these QA3 reps will bring SSN’s total rep count to greater than 500, according to the InvestmentNews B-D Data Center, an increase of 6%.
The addition of these reps will rank SSN as the
54th largest independent broker-dealer, according to
InvestmentNews data.
The reps were attracted to SSN because of its stability and strong capital position, Mr. Wilkinson said.
Last Friday evening, about 400 QA3 reps were told the broker-dealer was shutting down today, leaving many reps in a mad scramble to find a broker-dealer. Some had made contingency plans, including a group of up to 50 reps that joined FSC Securities Corp. (Read:
‘So who’s the big winner in the QA3 rep sweepstakes?’)
QA3, which at its peak did
$50 million per year in gross revenue, is one of the most substantial independent broker-dealers to exit the business in the past year. According to InvestmentNews, about two dozen firms
last year decided to shut down or were forced to shut down, facing rising legal costs and a tough regulatory environment.
In January, QA3 lost a $1.6 million arbitration award to an elderly couple who invested in real estate deals that went bust.
Regulators with the
Financial Industry Regulatory Authority Inc. have been watching firms’ levels of net capital quite closely as of late, as losses of securities arbitration claims have to be recorded in a firm's net-capital calculations. According to its 2009 audited financial report, QA3 had $118,000 in excess net capital.
