Though Investors Capital Chairman Ted Charles has publicly filed to sell a 54.6% stake in the firm he founded, it is not likely that the independent broker-dealer will be sold to another IBD any time soon, experts say.
Charles (left), who started the firm in 1995, filed an S-3 form with the SEC to sell his shares in early March.
This filing, legal and other sources explain, is used for individuals to raise capital. Such registration statements do not frequently kick-off a change in control from one business entity to another.
“Filing an S-3 is not the logical way to unload one’s independent broker-dealer,” said Chip Roame of Tiburon Strategic Advisors in an interview.
“More traditionally, such a deal would be shopped by investment bankers,” explained Roame. “Tiburon almost always is approached as part of an inquiry about Tiburon clients’ interests. We have not been approached on this one.”
Investors Capital, which has about 570 advisors, would not comment on the issue, noting that it was in a “quiet period” related to the registration. Its shares, trading under the ticker symbol ICH, were up 5.25% to $6 on Tuesday, when the overall markets were down 1.5%.
Regarding speculation on possible suitors, experts say, LPL Financial (like other growing IBDs) does look at all its options, but the two independent broker-dealers may not make a perfect fit. LPL Financial is a self-clearing IBD, while Investors Cap relies on Pershing for its clearing operations.
“LPL Financial just went through the acquisition of the old Pacific Life BDs and eliminating Pershing,” Roame said. “That’s a lot of work. The obvious buyer of Investors Cap would be a larger Pershing-using IBD.”