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Troubled GunnAllen to Purchasd by Progressive Asset Management.

GunnAllen Financial has been the sbject of 17 regulatory actions.  In December. the  Financial Industry
Regulatory Authority descended on GunnAllen's Tampa, Fla., offices to audit the firm's net-capital requirements so that it could remain open for business.  Rumors abound that during this period the company was trying to settle many of the FINRA securities arbitration claims against it by its public customers under threat of insolvency.   Last month also, John Sykes quit the  GunnAllen board, and Scott Bendert, CFO of GunnAllen Holdings and acting chairman of the broker-dealer, also resigned.

GunnAllen continues to grapple with lawsuits and litigation stemming from a rogue broker, Frank Bluestein who sold investments in what turned out to be a $250 million Ponzi scheme, according to a Securities and Exchange Commission complaint. The firm was also one of the independent broker-dealers that sold securities of Provident Asset Management, a series of oil and gas deals that the SEC this summer charged with fraud. Investors have begun to sue firms and advisers over the Provident investments.  

Earlier this month, GunnAllen lost a top-producing branch, Acumen Investment Services, one of GunnAllen's top-10 producing branches with 19 registered representatives. On Jan. 4, the firm became affiliated with Paulson Investment Co. Inc., which is based in Portland, Ore.

Today, the company reported that GunnAllen Financial Inc. has reached an agreement to be acquired by a West Coast asset manager, Progressive Asset Management Inc., which also controls a broker-dealer.

It has been reported that the combined broker-dealers would have about 1,000 independent reps and advisers, catapulting the firm into the top 30 largest independent broker-dealer. Progressive bills itself as a socially conscious investing shop. It also  owns/controls Financial West Investment Group Inc., a broker-dealer and investment adviser with 340 reps and 140 offices.

Terms of the deal have not been disclosed, said David Levine, executive vice president of Progressive. According to Investment News, he also declined to specify if the firm would be acquiring the GunnAllen broker-dealer or only its advisers and assets. In such acquisitions, buyers sometimes shy away from buying the entire broker-dealer, because of the potential legal risk of acquiring liabilities such as customer lawsuits.

While it is believed that GunnAllen, who has an extensive history of hiring registered representatives formerly associated with expelled or rogue brokerage firms, and forces these brokers to obtain and pay their own Errors and Omissions Liability Insurance, it is clear if GunnAllen will have the ability to pay any retention associated with these policies, and aside from any consideration paid or received by GunnAllen in connection with the sale of all or substantially all of its assets (bulk-tranfser anyone?) to Progessive, injured investors may again be let holding the proverbial bag.

If you have been the victim of securities fraud by GunnAllen contact the Guiliano Law Firm, P.C.  Our practice is limited to the representation of injured investors.  There is no charge for an initial consultation and cases are accepted on a contingency fee basis. For more information call (877) SEC-ATTY.