First Montauk Securities (FMSC) is ceasing its broker-dealer operations
US-based First Montauk Financial has completed the sale of certain assets of its primary subsidiary, First Montauk Securities, a registered broker-dealer and investment adviser, to First Allied Securities, an Advanced Equities Financial company.
First Montauk Securities (FMSC) is ceasing its broker-dealer operations. Many of First Montauk’s independent registered representatives joined First Allied and First Allied acquired the right to service the customer accounts of those representatives that join First Allied.
Under the terms of the definitive asset purchase agreement First Montauk will receive an aggregate purchase price of approximately $4.2 million which includes receipt at the closing of a credit for $250,000 which was paid to First Montauk upon the signing of the agreement in July 2008 and a credit for the cancellation of the balance of principal and interest outstanding totalling approximately $1.05 million under a secured convertible promissory note, dated December 7, 2007 executed in connection with a loan to First Montauk by an affiliate of First Allied.
The balance of the purchase price is payable in two instalments, 30 days and
90 days after the closing. Such instalments may be subject, however, to certain downward adjustments under the terms of the asset purchase agreement.
First Montauk said that it will use a portion of the proceeds to pay outstanding obligations of the company and its broker-dealer subsidiary to wind down their existing operations and a portion of the proceeds will be paid to those of FMSC’s independent registered representatives who have affiliated with First Allied.
The board is evaluating the benefits of positioning the company as a shell company to be used as a potential merger candidate for another operating business.
First Montauk also announced that the employment contracts of Victor Kurylak, president and CEO of the company, and Celeste Leonard, the company’s executive vice president and chief compliance officer of FMSC, will terminate on December 31, 2008 in accordance with their respective terms and will not be renewed by the company. Mr. Kurylak and Ms. Leonard will, however, remain on the board of directors of the company.
Mr. Kurylak said: This sale brings to an end our broker-dealer operations which have been hard-pressed to compete in this difficult economic environment.