The sudden resignation last week of John Sykes, chairman of GunnAllen Holdings Inc., has raised questions about the future of the company and its broker-dealer, GunnAllen Financial Inc.
The sudden resignation last week of John Sykes, chairman of GunnAllen Holdings Inc., has raised questions about the future of the company and its broker-dealer, GunnAllen Financial Inc.
Mr. Sykes, who bought the beleaguered independent-contractor firm last year, left last Wednesday. He did not return telephone calls last week to comment.
In addition to Mr. Sykes, Scott Bendert, chief financial officer of GunnAllen Holdings Inc. and acting chairman of the broker-dealer, also resigned, sources said, as did several company directors including Rick Frueh, one of the co-founders who sold the firm to Mr. Sykes.
Linda Rotondo, GunnAllen's marketing director, also did not return repeated calls last week seeking comment.
'Business as usual'
In an e-mail to the firm's brokers Thursday, Fred Kraus, the broker-dealer's president and acting chief executive, wrote that it will be “business as usual” for the brokers despite the turnover at the top, according to a representative who read the e-mail to InvestmentNews.
The firm said it plans to seek advice from Mr. Frueh, who had been working as an adviser, and former president and co-founder Jay Gunn, the e-mail said.
The firm's advisers had a conference call with Mr. Kraus late Thursday.
Rumors and speculation surrounded the firm after Mr. Sykes' sudden resignation. Some executives also wondered about the future of broker-dealer Pointe Capital Inc., which was bought by GunnAllen Holdings last June.
According to the adviser, “the phones are lit up with recruiters.”
Mr. Sykes, founder and chairman emeritus of Sykes Enterprises Inc., which operates call centers, led the investment group that acquired a controlling position in GunnAllen Holdings in 2008 for an undisclosed sum. He named four of the seven members of the company's reorganized board of directors.
Earlier this decade, the firm's broker-dealer was one of the fastest-growing independent-contractor firms. GunnAllen continues to grapple with lawsuits and litigation stemming from allegations against broker Frank Bluestein, who was charged in a Securities and Exchange Commission complaint with selling investments in an alleged $250 million Ponzi scheme.
The firm was also one of the independent broker-dealers that sold securities of Provident Royalties LLC, which the SEC this summer charged with fraud involving a series of oil and gas deals. Investors have begun to sue firms and advisers over the Provident investments.
As of the most recent InvestmentNews survey, GunnAllen Financial had 726 affiliated reps, with 285 of those producing more than $100,000 in fees and commissions.
In March, Mr. Sykes used a tragic occasion to confirm his desire to keep the company on course.
Gordon Loetz, chief executive of both GunnAllen Holdings and GunnAllen Financial, died in a boating accident. Mr. Loetz was a close friend of Mr. Sykes', as well as his personal financial adviser.
After Mr. Loetz's death, Mr. Sykes said in a statement: “The firm will continue, and we are committed to seeing Gordie's vision for the firm fulfilled.”
That no longer appears to be the case.
E-mail Bruce Kelly at bkelly@investmentnews.com.
