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March 2, 2012

Legent's New Owners Promise Big Expansion

By Staff Reports

Legent Clearing, another small mom-and-pop clearing broker recently sold, is going to "dramatically" increase its clientele, the new owners promise. They expect to double the correspondent base over the next year.

Legent Clearing, with fewer than 100 correspondents, was recently sold to Cor Securities, a private equity firm in Santa Monica, Calif.

Little Legent had been rumored on the block for some time. Industry observers suggested that its 75 correspondents couldn't generate enough revenue for its survival and other small clearing brokerages will also be swallowed..

Still, Cor Securities CEO Steven Sugarman promised new services and expanded access to capital. He also said Legent will dramatically increase its number of correspondents as other clearing brokerages lose business.

"We believe there is a hole in the market of financially strong clearing firms serving the regional broker-dealer," Sugarman told CQ&D.

He added that numerous clearing brokerages are in trouble because they have become dependent on margin loans and other kinds of debt business in an era of historically low interest rates. He also promised that Legent would be expending its product line.

How? He said that Legent will be introducing new investment products and services that will rival those of the biggest firms in the business, with new board members who have worked many of the clearing industry's Big Boys.

"We believe that we can develop a product offering that will enable them (Legent) and their customers to make more money," Sugarman said.

He also said that Legent, although small, is profitable. Cor Securities officials also promised financial stability through a capital infusion of $20 million.

"The infusion of new capital and the elimination of debt transforms our balance sheet and affords us the opportunity to better serve our clients," said Legent CEO Christopher Frankel.

Sugarman, who is adding former Pershing and Bear Stearns officials to the Legent board of directors, said Frankel will continue to head Legent.

 

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