Troubles in the Brokerage World

It’s a cold cruel world out there for those at smaller brokerage firms. Blame the drop in volume and very few new issues to get excited about for quite some time, and the times have become admittedly tough. According to FINRA, equity filings dropped from 816 in 2007 to 569 as of 2011. Member firms dropped from 5,005 in 2007 to 4,446 as of January 2012. As the economy continues to lag, the industry is waiting and watching for more bad news. Ticonderoga Securities recently shuttered its doors, and reports point to a hit to the bottom line as the cause. The firm’s Web site announced the closing as of January 24th.

Firms are also busily tackling technology and souped-up compliance, and the outlays, added to the market conditions, can be daunting. Susquehanna Financial directly pointed to compliance as one of its expense drivers. In early January, Susquehanna Financial cut 15 percent of its trading, research and sales personnel, and David Pollard, head of strategic planning at the firm, also blamed “economic conditions” in an interview with Bloomberg.

FYI: don’t assume that recent hirings are a signal that a brokerage isn’t in trouble. In early January, WJB Capital shuttered its operations. But in December, the firm hired four equity research analysts. A bigger player, Ladenburg Thalmann & Co., has benefitted from the shakeup, cherry picking the top talent from their fallen comrade.

Ladenburg Thalmann Financial Services announced expansion in its institutional equity business at its broker-dealer subsidiary, Ladenburg Thalmann & Co. Of the new additions, the bulk of the senior personnel additions were snagged from the late WJB Capital, including their former principal John Miles, former vice president of the portfolio trading group Alexander Bonello, former head of business development Christopher Calabrese, and former director of options sales and trading Michael Marino.

John Miles and Alexander Bonello take over the roles of managing directors at Ladenburg Thalmann & Co. Christopher Calabrese assumes the post of managing director of institutional sales, and Michael Marino will serve as managing director of institutional options sales and trading. But don’t expect places for every displaced person in this new and smaller brokerage environment, especially as the majority of the biggest players continue cutbacks too.