Penson expects to take over Ridge Clearing accounts next week

Penson Worldwide Inc. said that it expects its U.S. securities-clearing subsidiary, Penson Financial Services Inc., to begin serving accounts of Ridge Clearing and Outsourcing Solutions Inc. on or about June 25.
JUL 22, 2010
Penson Worldwide Inc. said that it expects its U.S. securities-clearing subsidiary, Penson Financial Services Inc., to begin serving accounts of Ridge Clearing and Outsourcing Solutions Inc. on or about June 25. Penson announced its plans to buy Ridge last November, saying the combination will result in the nation's second-largest clearing firm, behind The Bank of New York Mellon Corp.'s Pershing LLC subsidiary. Ridge is being sold by Broadridge Financial Solutions Inc., which is leaving the securities-clearing business to focus on its shareholder servicing and technology service bureau businesses. Penson chief executive Philip Pendergraft this month said that the firm expects to pay between $43 million and $47 million for some 100 accounts served by Ridge, down from a range of $60 million to $70 million when the transaction was first announced. Penson said Monday that the Financial Industry Regulatory Authority Inc. approved its request to inform customers of correspondents served by Ridge of the impending change, calling it “a significant step” toward final approval that it expects to occur by the end of this month. Because of declining trading volume and the loss of some Ridge clients, the purchase price and anticipated revenue from Penson have declined since the agreement was negotiated. Neuberger Berman Group LLC, an asset management firm that was one of Ridge's biggest accounts, is transferring its approximately 50,000 clearing and custody client accounts to J.P. Morgan Clearing Corp. GunnAllen Financial Inc., an independent broker-dealer that cleared through Ridge, was closed by regulators in March. Mr. Pendergraft this month also said that Penson expects additional revenue of $50 million to $60 million annually from the Ridge accounts. Broadridge Financial booked $75 million of clearing revenue from the Ridge unit in its 2009 fiscal year, which ended June 30. Penson ended the day up seven cents, or 1.1%, at $6.51. Broadridge lost 24 cents, or 1.2%, to close at $19.31.

Latest News

No succession plan? No worries. Just practice in place
No succession plan? No worries. Just practice in place

While industry statistics pointing to a succession crisis can cause alarm, advisor-owners should be free to consider a middle path between staying solo and catching the surging wave of M&A.

Research highlights growing need for personalized retirement solutions as investors age
Research highlights growing need for personalized retirement solutions as investors age

New joint research by T. Rowe Price, MIT, and Stanford University finds more diverse asset allocations among older participants.

Advisor moves: RIA Farther hails Q2 recruiting record, Raymond James nabs $300M team from Edward Jones
Advisor moves: RIA Farther hails Q2 recruiting record, Raymond James nabs $300M team from Edward Jones

With its asset pipeline bursting past $13 billion, Farther is looking to build more momentum with three new managing directors.

Insured Retirement Institute urges Labor Department to retain annuity safe harbor
Insured Retirement Institute urges Labor Department to retain annuity safe harbor

A Department of Labor proposal to scrap a regulatory provision under ERISA could create uncertainty for fiduciaries, the trade association argues.

LPL Financial sticking to its guns with retaining 90% of Commonwealth's financial advisors
LPL Financial sticking to its guns with retaining 90% of Commonwealth's financial advisors

"We continue to feel confident about our ability to capture 90%," LPL CEO Rich Steinmeier told analysts during the firm's 2nd quarter earnings call.

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.