Little Rock RIA to Absorb Concert Wealth in Aftermath of SEC Fine
Sowell Management Services, a Little Rock, Ark.-based registered investment adviser, has made a deal to absorb the 120 advisors affiliated with California-based Concert Wealth Management, .
Concert Wealth and its founder Felipe Luna have been searching for stability since the Securities and Exchange Commission fined them $180,000 for overstating assets and profit in capital-raising documents.
If all 120 Concert advisors move with their $1.5 billion of client portfolios intact, Sowell would triple its assets under management with the addition of 10,000 custodial accounts, according to the announcement. Sowell currently has around $540 million and 4,000 accounts. Terms were not disclosed.
The deal, which is expected to be completed within the “next several weeks,” comes as a result of firms that service registered investment advisors and custody their clients’ accounts abandoning Concert.
TD Ameritrade’s institutional arm and Fidelity Investment’s Wealth Services arm severed ties with Concert following the SEC penalty, according to a report in the online publication “RIABiz.” Luna, who paid $60,000 of the SEC fine, said the report was not entirely accurate but declined to provide clarification.
The SEC alleged that from 2010 to 2013 Luna and the company exaggerated assets under management by as much as $1 billion in some years and its profit by as much as $1 million (in a year in which it had a loss). The claims were made in private placement documents that ultimately raised $2.2 million from 21 investors, many of whom were relatives of Luna, according to the SEC.
Luna declined to comment on how the deal with Sowell will affect the firm’s investors or how many Concert advisors he expected to join. Bill Sowell, president and CEO of Sowell Management, did not return a call for comment.
In a news release, Sowell described his firm as a Turnkey Asset Management Program (TAMP) and back-office services provider that targets independent advisors looking to outsource the investment and client service functions of their businesses. It offers custodial services through Fidelity, TD Ameritrade, Schwab, Pershing Advisor Solutions, and units of Scottrade and Trust Company of America.
Luna, who founded Concert in 2005 as a rollup of independent advisors and brokers, is expected to end his relationship with the operation, according to RIABiz. He declined to comment, but said he is focusing on developing a client relationship management software firm, Omniscient CRM. Concert Wealth advisors will continue to use Omniscient at Sowell, he said.