Inter-dealer broker Tullett Prebon is expanding into equities and announced May 2 it is acquiring Elevation LLC, a mid-size U.S. equities, foreign equities and equities derivatives institutional interdealer broker for $13 million.
The acquisition is subject to regulatory approval and other customary closing conditions and is expected to close before the end of the second quarter.
John Abularrage, chief executive officer for the Americas at Tullett Prebon, said in a statement, "We are delighted to have an agreement with Elevation and look forward to expanding our offering in the equities and equities derivatives markets. Importantly, the acquisition will reinforce our continued commitment to growing our business in the Americas."
Furthermore, a spokesperson for Tullett told Traders Magazine that "all Elevation staff" will join Tullett Prebon and will be located in the firm’s New York and New Jersey offices. Elevation currently has a staff of 30. She didn’t provide further information.
Charlotte, N.C.-based Elevation has more than six years’ experience providing high-touch trading in the equities and equities derivatives markets. . It also has a presence in fixed income, high-yield debt and the futures markets. It offers clients independent research through affiliate Variant Perception, which focuses on global macroeconomic analysis.
The firm was founded by chief executive Pat Sheehan after he left Deutsche Bank, where he worked in the global rates proprietary trading group in London and New York City. Sheehan got his start in the trading business at First Union Bank’s credit and banking trading training program in 1987. He rose through the ranks of the North Carolina-based bank and, from 1989 through 2000, ran the proprietary trading desk. He later joined RBS Greenwich and from 2001 until 2003 was a senior proprietary trader in the firm’s London office.
One trader said the acquisition makes sense since Tullett hasn’t had much of a presence in the equity markets in the U.S. "They probably want back into the equities space," he added.
However, another trading veteran questioned the purchase. He reasoned other brokers, such as Ticonderoga and WJB Capital, have had to close shop as a result of the recent fall off in trading volume and commission pool.
"This purchase makes no sense to me," the veteran broker said. Given the fallout over the last nine months he argues more small or midsize firms will likely close-up. "Even when you look at Raymond James buying Morgan Keegan, they kept very few Morgan people and wanted nothing to do with their analysts and trading personnel," he said.
Elevation was censured and fined $10,000 earlier this year for alleged misconduct concerning its options business. FINRA found that the firm failed to establish, maintain and enforce an adequate supervisory system for its options activities. The findings also said that the firm failed to adhere to multiple requirements of FINRA Rule 2360, the options rule, by failing to comply with its registration and customer agreement requirements.
