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 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.
