Lowlights of 2014: From Schorsch Drama to LPL's Regulatory Woes
December 16, 2014 8:11 PM
Lowlights of 2014: From Schorsch Drama to LPL's Regulatory Woes
From the family feud that rocked Nicholas Schorsch's REIT and IBD empires to LPL's regulatory lapses and a wealth management crisis sparked by a CEO's private fund, the advisory industry had a healthy share of lowlights in 2014. Here are some of the most memorable. -- Charles Paikert
Be sure to check out the highlights as well: Highlights of 2014: From Online Alliances to Mega Deals
You can also view this in a single-page version here.
Be sure to check out the highlights as well: Highlights of 2014: From Online Alliances to Mega Deals
You can also view this in a single-page version here.
Schorsch Family Feud
RCS Capital, Nicholas Schorsch's advisory business, got into a legal battle with American Realty Capital Properties, Schorsch's property and REIT company, following an accounting scandal at ARCP.
Impact: A black eye for Schorsch, who resigned as chair of ARCP and a suspension of sales of Schorsch-controlled REIT products by scores of IBDs, including LPL Financial.
Image: Bloomberg, RCS Chairman Nicholas Schorsch
Impact: A black eye for Schorsch, who resigned as chair of ARCP and a suspension of sales of Schorsch-controlled REIT products by scores of IBDs, including LPL Financial.
Image: Bloomberg, RCS Chairman Nicholas Schorsch
Gross Gaffes
Erstwhile Bond King Bill Gross' head-scratching public appearance at a Morningstar conference in June confounded advisors. Gross left Pimco to join Janus Capital Group as a portfolio manager in October, with about $1 billion in net deposits following him over the last few months.
Impact: Pimco scrambles to regain bond fund flows while Gross scrambles to regain his former stature.
Image: Bloomberg, Pimco co-founder Bill Gross
Impact: Pimco scrambles to regain bond fund flows while Gross scrambles to regain his former stature.
Image: Bloomberg, Pimco co-founder Bill Gross
Convergent Crisis
David Zier, CEO of the $8.4 billion wealth management firm, died of an apparent suicide after irregularities were found in a private fund he ran outside the firm -- but which was monitored by the firm. Steve Lockshin, Convergent chairman and long-time friend of Zier, stepped down in early December.
Impact: Convergent, a subsidiary of City National Bank, faces regulatory scrutiny, potential lawsuits and defections by advisors and clients.
Impact: Convergent, a subsidiary of City National Bank, faces regulatory scrutiny, potential lawsuits and defections by advisors and clients.
Robbins Hype
Motivational speaker Tony Robbins targets advisory business as his next cash cow, publishing a new book about financial advice for consumers and delivering a three-hour speech at the MarketCounsel conference.
Impact: Robbins' mixed message leaves the industry unclear on how much he intends to boost advisors or himself.
Image: Bloomberg, Author Tony Robbins
Impact: Robbins' mixed message leaves the industry unclear on how much he intends to boost advisors or himself.
Image: Bloomberg, Author Tony Robbins
Diversity Detour
A Financial Planning story reports that less than 3% of RIAs are African-Americans.
Impact: Industry associations vow to boost minority programs as university financial planning programs begin to reach out to African-Americans.
Impact: Industry associations vow to boost minority programs as university financial planning programs begin to reach out to African-Americans.
LPL's Regulatory Lapses
Issues with systems, policies and procedures at the country's largest IBD resulted in major regulatory fines.
Impact: LPL saw a 4.2% drop in Q2 net income and was forced to spend $23 million in regulatory expenses in the third quarter, $18 million more than it had anticipated. LPL was "not happy," CEO Mark Casady made clear.
Image: LPL CEO Mark Casady
Impact: LPL saw a 4.2% drop in Q2 net income and was forced to spend $23 million in regulatory expenses in the third quarter, $18 million more than it had anticipated. LPL was "not happy," CEO Mark Casady made clear.
Image: LPL CEO Mark Casady
Bashaw's Battles
James "Jeb" Bashaw, a former star broker at LPL Financial, was cut loose by the IBD after regulatory concerns. He spent only 10 days at Wunderlich Securities before landing at a small B-D in Orlando.
Impact: Bashaw contests FINRA findings, highlighting a lack of clarity over regulatory issues that concerned some firms but not others.
Image: James "Jeb" Bashaw
Impact: Bashaw contests FINRA findings, highlighting a lack of clarity over regulatory issues that concerned some firms but not others.
Image: James "Jeb" Bashaw
