Ladenburg To Buy Beleagured Securities America
After all of the turmoil from the marketing and sales of Medical Capital Holdings and Provident Royalties private placement offerings, Securities America finally has a buyer, according to Investment News. Securities America was yet another independent broker dealer who suffered massive losses and litigation costs from the sales of the fraudulent private placements. The deal calls for Ladenburg Thalman Financial Services Incorporated to pay $150 million in cash for the firm, with additional future payments contingent upon meeting certain performance targets. It had been rumored for some time that Ladenburg Thalman was one of the most likely candidates to take over Securities America.
Ladenburg Thalman is the parent company of Triad Advisors and Investacorp. The indications are that Securities America will continue to operate out of its offices in La Vista, Nebraska. According to the article, Securities America has nearly 1,700 registered representatives and some $50 billion in customer assets. Ladenburg is predicting around $675 million in revenue from the combined companies, along with roughly 2,700 registered representatives and some $70 billion in total customer assets. Ladenburg’s chairman, Phillip Frost, said “The acquisition of Securities America is a transformative transaction for Ladenburg, enabling us to immediately bolster our position in the vibrant independent broker dealer space and provide a platform for future growth. This strategic combination is consistent with Ladenburg’s long stated goal to grow into a more diversified financial services firm with a stable, growing revenue stream from our independent broker dealer business to balance our capital markets and investment banking areas.” The deal is expected to close by the end of 2011, subject to getting its regulatory blessing.
This will be the third purchase of an independent broker dealer by Ladenburg. It had previously purchased Investacorp Incorporated in 2007 and Triad Advisors Incorporated in 2008. The acquisition of Securities America, which was bought by Ameriprise in 1998, will be by far the largest acquisition for the Ladenburg firm.
Earlier in the year when Ameriprise, the parent company of the independent broker dealer, cut a deal for $150 million to settle with Securities America clients for their private placement claims. Overall, investors had claimed losses in the $400 million range related to sale of the Medical Capital Holdings Incorporated and Provident Royalties LLC private placements, both of whom were slapped with fraud charges by the U.S. Securities and Exchange Commission (SEC) in 2009.