Sterne Agee Confirms CEO Ousted Due to Federal Probe

Sterne Agee Confirms CEO Ousted Due to Federal Probe

Birmingham, Ala.-based investment brokerage firm Sterne Agee Group Inc has confirmed that its former chief executive James Holbrook was fired after federal investigators told the firm that he was under investigation, Investment News reports.

Holbrook was fired at the end of May, along with his son, Billy Holbrook, Sterne Agee Group’s chief operating officer, and an undisclosed number of other executives. Holbrook was replaced by Eric Needleman, who also took over as chief executive officer of one of the firm’s broker-dealers, Sterne Agee & Leach, Investment News reports.

According to Birmingham Business Journal, the Holbrooks both resigned from Sterne Agee’s board of directors last week. In his resignation letter to the board, James Holbrook dismissed media reports about him as baseless and untrue.

“The allegations are grossly overstated,” Bruce Gordon, an attorney representing the Holbrooks, told Bloomberg. “We’re confident the truth will prevail and my clients will be vindicated.”

In a filing with the Financial Industry Regulatory Authority, Sterne Agee Group said that it was notified on May 20 by the Treasury and Justice Departments that James Holbrook was under investigation for the “possible misuse of holding company assets,” Birmingham Business Journal reports.

The probe was looking into whether Holbrook misused company airplanes, boats, hunting clubs and condominiums, a person familiar with the matter told Bloomberg last month.

Holbrook’s BrokerCheck report stated that, at the time James Holbrook was fired, Sterne Agee had already placed him under internal review for the potential misuse of corporate assets, Investment News reports. A special shareholders meeting had been for scheduled for last week for a vote on removing Holbrook and his son from Sterne Agee’s board of directors, according to Investment News.

“Although the Holbrooks’ termination was likely a fait accompli by the time members of the group board were made aware of the investigation, learning of the investigation reinforced to the group board the need to accelerate change,” Sterne Agee spokesman Mike Goodwin told Investment News in an e-mail. “The group board acted promptly to install new and experienced leadership and launched its own internal investigation.”

More than a year ago Brian Barze, a former chief financial officer, filed a complaint against James Holbrook and the company, alleging fraud, breach of contract and defamation at Sterne Agee, Investment News reports.

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