In the News

First Allied’s Surprise Sale to REIT Creates ‘Whole New Dynamic’ for BDs

June 12, 2013
by Janet Levaux, AdvisorOne

Flush with cash, more REITs could follow in buyer Realty Capital’s footsteps

A real-estate group led by investor Nicholas Schorsch said early Wednesday that they planned to buy independent broker-dealer First Allied Securities from its private-equity owner Lovell Minnick Partners, which has owned a majority stake in the IBD for less than two years.

First Allied’s buyer is RCAP Holdings, which owns Realty Capital Securities. It is led by Schorsch, William Kahane, Michael Weil, Peter Budko and Brian Block. “In 2007, my partners and I perceived an opportunity to build an open architected, wholesale broker-dealer to distribute best-in-class investment solutions,” Schorsch said in a press release.

“Today, RCAP Holdings takes another step forward,” he said.

FINRA’s New Public Arbitrator Rules Make Little Sense: Compliance Pros

June 4, 2013
By Melanie Waddell, AdvisorOne

Arbitrators that have no understanding of the industry are ‘virtually incapable of making decisions that are objective and educated,’ says Henschen

Compliance professionals are questioning the merits of new FINRA rules that prevent people associated with mutual funds and hedge funds from serving as public arbitrators.

The Securities and Exchange Commission recently approved FINRA’s new rules, which become effective on July 1, and respond to concerns raised by “investor representatives” about such persons’ neutrality. In addition, FINRA amended the public arbitrator definition to add a two-year “cooling off” period before FINRA may permit certain individuals to serve as public arbitrators.

Other excluded persons include investment advisors, attorneys who work in the securities industry,

Questions raised about broker-dealer’s financial health

May 30, 2013
by Bruce Kelly, Investment News

Rep, recruiters say firm informed advisers it is in violation of net-capital requirements

Allied Beacon Partners Inc., a midsize independent broker-dealer with 200 registered reps, informed its advisers yesterday that the firm is in violation of industry rules requiring that sufficient capital be kept on hand to remain open for business, according to a rep at the firm, who spoke on the condition of anonymity. While the broker-dealer remains open — and brokers can make unsolicited sales of securities for clients looking to cash out of positions — reps no longer buy securities for their clients.

Other industry participants echoed what the rep told InvestmentNews about the status of the B-D.