Upstart HighTower snags $10B broker

Former Wall Street chieftains Philip Purcell and David Pottruck’s plan to snatch superstar brokers for a start-up advisory…

Former Wall Street chieftains Philip Purcell and David Pottruck’s plan to snatch superstar brokers for a start-up advisory firm and independent broker-dealer is making significant strides as a top broker is preparing to leave the ruins of his old firm and go independent.

This month, Richard Saperstein will take his $10 billion book of business — mostly in bonds and cash management for institutions and high-net-worth clients — and join HighTower Advisors LLC, the Chicago-based startup in which Mr. Purcell and Mr. Pottruck are significant investors.

InvestmentNews.com first re-ported Mr. Saperstein’s move last Thursday afternoon. In a prepared statement released to the media at the end of the day, HighTower officials confirmed the move.

Mr. Saperstein works for JPMorgan Securities Inc., which merged with The Bear Stearns Cos. Inc. of New York last fall.

Bear Stearns was the first major casualty of Wall Street’s implosion.

Before its collapse in March 2008 and subsequent fire sale to JPMorgan Chase & Co. of New York, it was the fifth largest investment bank on Wall Street.

It should come as no surprise that Mr. Saperstein, now a partner with HighTower, and his team of more than a dozen professionals were looking to leave JPMorgan, said one industry observer.

“The wide-open, freewheeling environment and style at Bear Stearns does not seem to fit the traditional stodgy bank atmosphere at a bank like JPMorgan,” said Rick Peterson, a recruiter in Houston.

Nabbing Mr. Saperstein is a financial coup for HighTower.

If he charges clients in his bond and cash portfolio a fee of 0.35% to 0.4%, standard for the industry, that means he alone could generate about $35 million to $40 million in revenue for HighTower, an astonishing sum for a firm to land in one fell swoop.

HighTower has already had success in luring big brokers away from the ruins of Wall Street.

In November, Nick Bapis left Morgan Stanley, where Mr. Purcell reigned as chief executive until 2005, to join HighTower. Mr. Bapis, who is based in Salt Lake City, manages $1.3 billion, according to published reports.

Over the past year, the exodus of elite brokers and assets from Wall Street has been steady.

Last May, fixed-income specialist Bill Gurtin completed the transition of his $5.2 billion book of business to his newly formed advisory firm, Gurtin Fixed Income Management LLC of San Diego.

Also last May, a Los Angeles-based group with $7 billion in assets left Merrill Lynch & Co. Inc. of New York. Merrill had regularly touted the two heads of that group, David Hou and Mark Sear, as among the firm’s elite producers. Their new firm is Luminous Capital, which is based in Los Angeles.

And in September, Convergent Capital of Rockville, Md., completed a lift-out of two advisory teams that oversaw $7 billion from New York-based Citigroup Inc.’s institutional client group. The advisers who left were George Dunn, Peter Dunne, David Mattia and Lori Van Dusen.

Including Mr. Saperstein’s gigantic book of business, those advisers listed above manage or control about $30.5 billion in client assets and have carried those assets away from former Wall Street titans.

When a big-time broker such as Mr. Saperstein leaves a firm, it is a blow. At the time of Mr. Gurtin’s departure from Morgan Stanley last spring, he said that the company’s top brass, including co-president James Gorman, personally tried to persuade him to stay.

Mr. Saperstein leads a team of reps and advisers that is one of the top groups in the country. According to a recent ranking in Barron’s magazine that is based on a variety of factors, including assets overseen by advisers, he ranked eighth in a list of the top 100 advisers in the country.

Mr. Saperstein is planning to move to HighTower within the next two weeks, said a client who was informed about his plans, asking not to be identified.

Neither he nor and Elliot Weissbluth, chief executive of HighTower, returned calls last Wednesday and Thursday seeking comment.

The office of Mr. Pottruck, former chief executive of The Charles Schwab Corp. of San Francisco, referred a call to HighTower.

And Mr. Saperstein potentially stands to have a stake in HighTower when his move is complete. The firm has set aside 25% of the company’s equity for financial advisers who join the firm.

J.P. Morgan Clearing Corp. will continue to clear and custody the majority of Mr. Saperstein’s clients’ assets, the firm said in its statement.

E-mail Bruce Kelly at [email protected].