Independent broker-dealer mergers and acquisitions continue to heat up as a buyer of wealth management businesses, Wentworth Management Services, said on Tuesday afternoon it acquired Purshe Kaplan Sterling Investments, a boutique firm that specializes in the securities business for brokers who become financial advisers.
The deal, which was announced in Miami at the MarketCounsel Summit, closed last week. Terms were not released.
For the year ended in March, Purshe Kaplan Sterling reported $61.6 million in total revenues, but just $183 in net income, according to
a filing with the Securities and Exchange Commission.
FINRA FINE
The Financial Industry Regulatory Authority Inc. in February ordered Purshe Kaplan Sterling to pay nearly $3.4 million in restitution
to a Native American tribe, after the tribe paid excessive sales charges on purchases of non-traded real estate investment trusts and business development companies. Finra also fined the firm $750,000 for its failures to supervise the sales of these securities.
Purshe Kaplan Sterling has a unique standing in the brokerage industry as the majority of its 1,200 advisers are so-called breakaway brokers from Wall Street banks like Morgan Stanley and Merrill Lynch. Those brokers move most of their business to a registered investment adviser and become licensed with a state or the SEC. Purshe Kaplan Sterling is the broker-dealer for the adviser's remaining transactional or commission business.
Purshe Kaplan Sterling has 485 offices in 50 states. The firm's management team will remain in place, according to a statement from the companies.
SEEKING DEALS
And Wentworth is looking to acquire more brokerage firms, according to its CEO, Ryan Morfin. In the statement announcing the transaction, he said that partnering with Purshe Kaplan Sterling "will enable us to smoothly acquire and integrate additional independent broker-dealers to the Wentworth family."
After a slow start to the year, independent broker-dealer mergers and acquisitions have picked up pace.
Most notably,
LPL Financial said in August that it bought the assets of the four firms in the National Planning Holdings Network. A recent report from
Fidelity Investments noted that, as operating margins of IBDs have plummeted over the last decade, two types of business models have emerged as the industry steadily consolidates: large firms with scale, and smaller more focused firms serving a niche.
