Another independent broker-dealer is changing hands.
This time, Newbridge Securities Corp., a mid-size firm with about 200 reps and advisers, will be acquired by a foreign firm, the London-based European Wealth Group. The deal was announced jointly Tuesday.
Terms of the deal were not disclosed.
"We are ambitious to grow both organically and dynamically by acquisition," said Marianne Ismail, CEO of European Wealth Group, in the announcement. "Newbridge presents a unique opportunity to invest in an established, well-positioned and nationally represented company."
Newbridge
reported $26.17 million of total revenue in 2016 and a net loss of nearly $488,000.
Leonard Sokolow, CEO of Newbridge Financial Inc., a holding company, did not return a call seeking comment about the acquisition.
Newbridge recently has been the focus of state securities regulators. In July, the Pennsylvania Department of Banking and Securities
fined Newbridge Securities $499,000 for failing to supervise a broker in connection with the sales of structured products.
And in 2016, Newbridge Securities was
one of seven broker-dealers fined a total of $238,000 by Secretary of the Commonwealth of Massachusetts William Galvin for playing a role in a 2015 proxy fraud committed by the defunct Realty Capital Securities.
The Newbridge deal, which still needs to be approved by regulators and is expected to close by early next year, is the latest in
a series of broker-dealer mergers so far this year.
One industry observer noted that the securities industry is getting increasingly difficult for firms that generate revenue from trades and commissions rather than fees. In 2016, 82% of Newbridge's revenue came from commissions, according to a filing with the Securities and Exchange Commission.
Noting its history of regulatory problems, Jonathan Henschen, an industry recruiter who formerly did business with the firm, said the deal "gives Newbridge some breathing room at a time when the regulatory environment is hostile to traditional stock and bond, transactional brokers."
And it's a lousy time to buy into the U.S. brokerage business, he added, with profits steadily declining at many firms for more than a decade.
"There's the unknown of the [Department of Labor] fiduciary rule and questions [about] the transactional business model," he said. "So many of those firms have left the business. Is that a viable model?"
