Edelman's parent company hit with Wells notice

Sanders Morris Harris Group Inc., a wealth management broker-dealer that owns financial planning mainstay Edelman Financial Services LLC, indicated in its quarterly report that regulators had decided to recommend disciplining the company. In a ‘Wells letter' sent in October, officials at the Financial Industry Regulatory Authority Inc. informed Sanders Morris Harris of their intent to bring an action against the Houston-based B-D. “The staff of Finra has made a preliminary determination to recommend that disciplinary action be brought against [Sanders Morris Harris] and two former employees, based on alleged violations of certain federal securities laws and Finra rules,” the report stated. The violations and deficiencies were spotted during a 2008 exam, the letter stated. Under the Wells procedure, the firm has an opportunity to respond to Finra before any action is taken. According to the filing, discussions have commenced between Finra and Sanders Morris Harris' legal counsel. John Unger, the firm's general counsel, told InvestmentNews that Sanders Morris Harris "corrected these issues, and none showed up on the 2010 exam" by Finra. The regulatory filing by the company made no mention of Edelman Financial Services in connection to the Wells notice. Ric Edelman, chief executive of Edelman Financial Services and president of Sanders Morris Harris, is one of the most widely recognized financial planners in the country. “The Ric Edelman Show” can be heard on radio stations across the country, and he has published several bestselling books. In 2009 and 2010, Barron's ranked Mr. Edelman as the No. 1 independent financial advisor in the nation. In 2005, Mr. Edelman sold 51% of his firm to Sanders Morris Harris, and two years later sold another 25%. "This all occurred prior to my getting involved with the management" of the firm, said Mr. Edelman. The issues cited by Finra "are in our distant past," he said.