Southland Brokerage Business
Smaller brokerages in Southern California seem to have weathered the Oct. 19 stock market crash fairly well, with few bankruptcies. The number of members of the National Assn. of Securities Dealers in Southern California and Southern Nevada edged down to 539 from 540 before the skid, said Kye Hellmers, NASD district director in Los Angeles.
“I would’ve thought there would be a bigger shakedown,” Hellmers said. “It’s safe to say that some firms were hurt. But it was limited and small and not industrywide.”
One firm, San Diego Securities, was forced to sell its assets to a Los Angeles-based company because of losses in option trading generated by one of its brokers.
Southern California is a good market for discount brokers, judging by the several discounters with headquarters or large offices here.
Discounters--who do not dispense investment advice and research, and thus charge commissions as much as 80% lower than full-service firms--appeal to investors who make their own decisions. The Southland has a high percentage of these self-reliant investors, in part because of its large population of high-income entrepreneurs who by nature are more independent, says Mark D. Coler, president of Mercer Financial Services, a New York consulting firm on discount brokers.
Also, the Southland has a high percentage of affluent retirees with the time and inclination to do their own investment research, Coler says.
Jefferies & Co., the Los Angeles-based brokerage that had gained a national clientele by specializing in so-called “third market” trading of big blocks of stock away from the exchanges, was stung last year when its workaholic founder and chief executive, Boyd L. Jefferies, resigned after pleading guilty to securities violations.
But after an initial loss of clients, the firm has bounced back under its current chief executive, Frank Baxter, says analyst Perrin Long with Lipper Analytical Securities. Although its profits were off last year, they were off less than other brokerage firms, Long said.
