Corporate & Securities Law

According to a recent article in InvestmentNews, capital-strapped broker-dealers are demanding loans from clearing firms as a sign-on condition.  Clearing firms, facing declining revenue and increased competition, have something new to worry about: more and more broker-dealers are seeking loans as an incentive to sign on with a new firm.

Some clearing firms are more than willing to strike a deal as the number of operating broker-dealers has declined and the fight for market share intensifies.  Currently, there are just  4,676 broker-dealers operating in the United States, a loss of 8.5 percent from 2005. 

One example was the bargain made by the broker-dealer units of Ladenburg Thalmann Financial Services and National Financial Services LLC, the clearing arm of mutual fund giant Fidelity Investments.  Last August, National Financial gave Ladenburg a $10 million, seven-year forgivable loan to become the exclusive clearing firm for Ladenburg's three broker-dealers: Ladenburg Thalmann & Co. Inc., Triad Advisors and Investacorp Inc.

Those needing legal counsel with respect to negotiating such forgivable-loan packages should feel free to contact attorneys at SNSFE.

Source:  InvestmentNews