On Monday and Tuesday, Securities America executives held a series of brief conference calls for the independent broker-dealer’s 1,800 advisors that focused on a settlement in the works involving the IBD, parent company Ameriprise Financial and attorneys for plaintiffs suing the firm over sales of private-placement shares in Provident Royalties and Medical Capital Holdings.
The calls were led by Jim Nagengast (left), CEO, and Janine Wertheim, vice president and chief marketing officer. According to a Securities America advisor who wished to remain anonymous and plans to leave the firm, the calls stressed the message sent by the company to reporters over the weekend.
“We made substantial progress in our mediation,” Wertheim said in an e-mailed statement on Saturday. Moreover, she wrote that “all interested parties have committed to a process that we hope will result in a full and final resolution of these matters.”
The company has declined to share other details about the negotiations. It also insists that its advisors are not departing due to the lawsuit.
Some experts, as well as some former advisors, say they hope the broker-dealer can overcome the present challenges. Meanwhile, they do expect some advisors to switch broker-dealers.
“This is unfortunate as I feel Securities America has been a solid IBD, its management (under Nagengast) is solid, and some 50 firms sold the [Provident Royalties] product,” said Chip Roame, head of Tiburon Strategic Advisors, in an interview Monday. “It seems Securities America is catching a worse rap than any other firm. That's unfortunate.”
Scott Hanson, co-founder and senior advisor of Hanson McClain Inc., an affiliate of Securities America until a few years ago, agrees. “I have great respect for the current leadership team, Jim Nagengast and Janine Wertheim,” he said in an interview on Monday. “It’s very unfortunate … and at this point nobody really knows how it’s going to end up, and neither do I,” Hanson explained. “I certainly hope for the sake of Securities America employees and advisors that they have some success in this process.”
Roame is hopeful that with the backing of Ameriprise, Securities America’s operations could continue. “Ameriprise has enough capital to back Securities America, if it so chooses,” he said. “Its actions here will likely determine its future.”
As the uncertainty continues, though, some advisors are working on Plan B.
“There might be some reps who are contemplating making a move as a result of this legal action,” Hanson said, “and they might end up spending a lot of time and money making a move to find in the end that it didn’t matter because Securities America had some success in this matter.”
The departing rep, though, believes the executives on the calls were “reading a prepared statement and bullet points,” rather than addressing advisors’ concerns. “It’s very telling what was not said,” he noted.