After undergoing major litigation costs, GunnAllen Financial Inc. has agreed to be acquired by Progressive Asset Management Inc., which already controls a smaller broker-dealer. Progressive claims to be a “socially conscious” investment firm.
The combination of the firms would appear to create a broker-dealer with about 1,000 independent advisors and brokers in more than 200 offices nationwide. If so, the resulting firm would be ranked in the 30 largest independent broker-dealers, according to information available from InvestmentNews.
The terms of acquisition have not been disclosed, according to David Levine, executive vice president of Progressive, who also did not specify whether his firm would be acquiring GunnAllen’s broker-dealer firm or only its advisers and assets. Often buyers of troubled securities firms seek to buy only the assets leaving behind creditors with little or nothing, including former clients of the firm who have ongoing suits and claims.
Nor has Fred Kraus, GunnAllen’s president, or any other spokesman of that firm commented on whether the acquisition of GunnAllen would include only that firm’s assets, or whether the entire firm would be acquired.
GunnAllen experienced phenomenal growth over the past decade, amid reports that salespersons and advisors may have been hired somewhat indiscriminately. More recently, a number of customer claims have surfaced, punctuated by a large Ponzi scheme in Detroit involving one of GunnAllen representatives. The firm has denied knowledge or responsibility for the representative’s actions regarding that scheme.
Late last year, John Sykes resigned as Chairman of GunnAllen Holdings Inc., the firm’s largest owner, but also purchased Pointe Capital Inc., another registered broker-dealer which had been purchased by GunnAllen Holdings only months earlier. Meanwhile, regulators from the Financial Industry Regulatory Authority Inc. (FINRA) descended on GunnAllen’s Tampa, Florida, offices to ascertain that the firm’s net-capital requirements were being met as litigation costs rose and assets were leaving the firm.
Lawyers for investors with claims pending against GunnAllen, its principles and/or its representatives are monitoring the events surrounding GunnAllen, now including the sale of that firm, to ascertain whether any transfer of its assets will be in a commercially reasonable manner and according to FINRA requirements.