What’s in a Name? Sometimes Not Enough

You might know that Tony Curtis is really Bernie Schwartz. Or that Bob Dylan is actually Robert Zimmerman.

But chances are you wouldn’t have a clue that Cortlandt Capital Corp. is the former Greenway Capital Corp. Or that First Montauk Securities Corp. includes remnants of Marsh Block & Co., a brokerage firm that folded on June 23.

Investors have grown pretty smart in recent years about the ins and outs of getting the real scoop on a stockbroker by calling state regulators and requesting a dossier on the salesperson who’s pitching them to open an account.

But when it comes to finding out about the company a broker works for, the report you get is often less than meets the eye. And to learn the whole story about some firms requires a large effort or bit of luck.

Sometimes you’ll be stumped because the full story on affiliations with problem brokers or firms simply doesn’t make it into the documents. Other times you’ll learn less than you should because “phantom principals” lend their money and influence--but not their names--to the firm. And other times you may get a full rap sheet on a firm that’s changed its name but doesn’t list the name of the previous firm in its records.

The bottom line: Even if you try hard, you cannot get the full story on a firm.

Public filings, for example, show that First Montauk Securities (based in Red Bank, N.J., not Montauk, N.Y.) worked out a $900,000 settlement with Escambia County, Fla., for alleged investor losses emanating from an office it has since closed. And that it is expected to settle--for a fine and a censure of one of the firm’s principals--with the Securities and Exchange Commission for problems related to the same branch.

You would not, however, learn that First Montauk shared an office in lower Manhattan with the now-defunct Marsh Block, a troubled company from whom it is likely to be hiring some employees.

Marsh Block was contesting an SEC cease-and-desist order, according to an annual regulatory filing. It also had received a subpoena from the SEC related to an unnamed “stock of a particular company.” (Marsh Block said it was cooperating.) And a customer was accusing Marsh Block and one of its brokers of mishandling his account to the tune of $1 million, the document says.

As for Marsh Block’s going out of business, attorney Larry Levine explains that its capital fell below levels the regulators would allow after “it sustained a judgment of approximately a half-million dollars.” First Montauk stands to hire some employees from Marsh Block in the process of taking over many Marsh Block accounts, although Paul Lieberman, special counsel to First Montauk, says the two firms are “still negotiating” on the number of hires.

Prospective customers might like to know about the Marsh Block connection, but they can’t learn about it easily. Neither the transfer of accounts from Marsh Block nor the hiring of some of its employees requires disclosure in First Montauk’s central registration depository records.

And so far as Lieberman is concerned, there is no link: “We’re not associated with the firm,” he says. Glad we got that straight.

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In other instances, brokerage firms suffering bad press sometimes “go out of business and start again at the same location under another name,” says Andrew Kandel, bureau chief for investor protection at the New York State Department of Law.

Name changes aren’t necessarily made to deceive investors, but a name change can be a red flag nonetheless.

Greenway Capital Corp. became Cortlandt Capital Corp. on Jan. 23, officially changing its name with the National Assn. of Securities Dealers.

Greenway’s name doesn’t appear on the NASD records that go to investors, although all its violations do appear. An NASD spokesman says investors would learn of the previous name if they called NASD to inquire about the company.

The problems include several investor arbitration claims; a $500,000 NASD fine in connection with charges of manipulation, which the company neither admitted nor denied; a cease-and-desist order by the Securities and Exchange Commission related to its handling of a private placement; and state regulatory citations, including cease-and-desist orders by Minnesota and New Hampshire and a suspension by North Carolina.

Six months after Greenway became Cortlandt, new troubles began. A former broker said he came to work on July 25 only to be told that he couldn’t trade anymore. No one was answering the telephones at Cortlandt’s office at 45 Broadway in New York last week. A woman answering the phone at a Mott Street office said the company is now called Gold Country and that she would have a superior call back. None did.

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They do pick up the phones, though, at Joseph Dillon & Co. in Great Neck, N.Y., where the former Cortlandt broker says a number of his former colleagues got jobs.

Steven Jaloza, who is listed in Standard & Poor’s Security Dealers of North America as compliance officer and chief financial officer of Dillon, said he “would rather not talk about that right now” when asked about reports of his firm’s hiring of Cortlandt brokers.

Asked if he was a compliance officer, he said he was not. Told that he was listed as compliance director, he said, “I shouldn’t be, because I’m not.” Queried as to what role he did play at the company, Jaloza hung up.

In fact, there are bad manners all around at Dillon, where, the next day, a woman answering the telephone said that only the company’s outside counsel could answer complicated questions such as “What is Mr. Jaloza’s title?”

A call to Greg Sichenzia, Joseph Dillon’s lawyer, also prompted a hang-up in response to the query about Jaloza’s title. (He phoned later to leave a message but couldn’t be reached on several subsequent calls.)

Guess some folks are just too busy to chat.

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Susan Antilla writes for Bloomberg News. She can be reached at santilla@bny15.bloomberg.com