Sterne Agee Takes Ex-CEO to Court Over Luxury Spending

The lawsuit comes after the wealth-management firm was told James Holbrook faced federal investigations

A former Sterne Agee-executive is under investigation. A former Sterne Agee-executive is under investigation.

Sterne Agee, a Birmingham, Alabama-based broker-dealer, is suing ex-CEO James Holbrook for using company assets for personal use.

“Sterne Agee has filed lawsuits to recover property, compensation, damages and costs related to Mr. Holbrook's actions,” the company said in a statement provided to ThinkAdvisor late Thursday. “Mr. Holbrook not only failed to observe proper governance standards, but also failed to disclose to the board his interest in transactions at issue in the lawsuits.”

The lawsuit – which was filed earlier this month in Jefferson County, Alabama, claims Holbrook used a corporate credit card for spending on fishing boats, a yacht, a vacation condo and ownership in a luxury ski chalet, and that he relied on company assets to join a marina and golf club in Key Largo, Florida, according to Bloomberg News.

“This action addresses Mr. Holbrook's misappropriation of corporate assets for his own personal benefit, and follows both federal and internal investigations into Mr. Holbrook's use of holding company assets,” Sterne Agee added.

According to the complaint, Holbrook did not employ any assets that belonged to Sterne Agee clients or vendors.

FINRA Broker-Check records indicate that in late May, Sterne Agee was notified that Holbrook was being investigated by the Department of the Treasury and the Department of Justice for the possible misuse of holding company assets; the company then terminated his employment.

At the same time, the privately owned Sterne Agee announced that Eric Needleman had taken on the role of chairman of the Sterne Agee Group and also was serving as CEO of Sterne Agee & Leach. The holding company board also appointed Sal A. “Joe” Nunziata as chief executive officer and president of Sterne Agee Group.

“The termination of the former CEO Holbrook was not an action by any individual executive of the holding company, but was an action taken by the Sterne Agee Group Board of Directors after learning of a federal criminal investigation into possible misconduct of Mr. Holbrook,” according to a company statement.

“As one of the oldest private investment banking companies, we are excited about the new direction that the board has taken the company,” said Eric Needleman, in a press release at the time. “With investment banking, mortgage, trust and private client groups all under the same umbrella, we feel that Sterne Agee is well positioned to continue to grow and thrive. These new changes are an exciting chapter in the firm’s 113-year history.”

Sterne Agee has about $23 billion in client assets and employs some 1,600 financial professionals.

As for Holbrook’s view of the lawsuit, “It’s a lot to do about nothing, and the allegations are grossly overstated,” said Bruce Gordon, an attorney representing him and son Billy Holbrook, in an interview with Bloomberg in June. “We’re confident the truth will prevail and my clients will be vindicated.”

James Holbrook entered the financial-services industry in 1970, when he joined First Birmingham Securities. He moved to Sterne Agee in 1990, FINRA records state. 

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