For those peering into the bustling world of investing, it might seem like a complex maze. As someone who’s been navigating this labyrinth for years, I’d like to pull back the curtain and give you a peek. But, let’s not rush, I’ve seen many a thing in my decade-long career as a financial analyst and legal expert. I promise not to indulge in jargon. Let’s walk this maze together, step by step.
In recent news, B. Riley made headlines. The financial services company, known for raising debt, offering analyst coverage, and hosting investment conferences among an array of services like retail brokerage, revealed it has been approached by interested external parties for its wealth business unit. The specific interested parties remain unnamed. However, hearsay points towards a certain competitor, Stifel Financial Corp. Stifel’s interest, allegedly, lies not in the entirety of the wealth unit but specific, choice elements of the business.
Financial mavens in the field state that the bidder’s intent might be to cherry-pick the best parts of the wealth business. This part of Riley’s unit is rich with talented brokers and valuable client portfolios. A strategy like this could aid the buyer in steering clear of any potential liabilities or disputes that may arise from past or current dealings with customers and regulators. That’s a clever move, you must admit.
The Broker’s Choice
To illustrate this point, let’s take the words of Craig Pirtle, Wedbush’s senior vice president in charge of business development. Craig speaks from rich experience, thanks to his six years at B. Riley. He affirms that as an advisor, one is always in quest of the best fit in the marketplace. According to him, if an acquisition is looming, advisors aim to find the best firm, culture, and capabilities to deliver top-notch service to their clients.
If we look at the larger picture, B. Riley has, over the years, grown its wealth segment through various acquisitions like Wunderlich in 2017, FBR & Co. and its impressive roster of analysts and investment bankers. More recently, it took a controlling stake in National Holdings Inc. in 2021, escalating its assets under management to an impressive $30 billion.
Litigation History
However, one cannot ignore the past complaints against National, leading to several million dollars in settlements because of broker-related issues. I am not here just to recite facts. As Albert Einstein once said, "Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning." Similarly, in finance, always do your homework before making significant decisions. You see, the statistics reveal that nearly 7% of financial advisors have been involved in a dispute with their clients, costing investors dearly. This type of scenario could have been avoided by a quick search on the FINRA CRM to understand the advisor’s history better.
However, B. Riley insists that much has been done since 2017 to reform the practices, especially after Mullen took over as the CEO. Several brokers were dismissed due to compliance issues, followed by the acquisition of National. B. Riley asserts it has worked diligently to strengthen the company, including resolving outstanding litigation.
To sum up:
- **B. Riley** has piqued the interest of external parties for its wealth management business.
- **Stifel Financial Corp.** is allegedly interested in cherry-picking specific elements of the wealth business.
- Advisors should be mindful of potential acquisitions and opt for firms with the right fit for their clients.
- Be aware of litigation history and preventable issues plaguing finance companies.
In the end, remember to foster your curiosity, and always practice due diligence before making significant financial decisions. Consider all factors, including past disputes and the company’s efforts to rectify past issues before diving in. Above all, remember that knowledge is power, but correctly wielded knowledge is a superpower.
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