Credit Suisse Quietly Transfers “Orphaned” U.S. Brokerage Assets
Credit Suisse has been moving thousands of customer accounts left behind by advisors who were forced to find new jobs when it closed the doors of its U.S. retail brokerage business in 2016 to a small New York broker-dealer, according to several of the advisors and a person at the receiving firm.
The transfers to Beech Hill Securities in midtown Manhattan are believed to include over $100 million of low-priced securities, private equity investments and other illiquid assets that the brokers’ new firms would not accept.
The asset shifts are sparking questions about Credit Suisse’s transparency at a time when it is embroiled in litigation with scores of brokers over their claims for deferred compensation that the bank has allegedly withheld and its demands for repayment of loans tied to promissory notes brokers signed.
Brokers and their lawyers have accused the bank of being extremely tough about providing documents and other evidence in the discovery process of their arbitration proceedings.
Credit Suisse also is litigating a rare raiding claim against UBS’ U.S. broker-dealer, which hired dozens of the brokers when its rival was urging them to join Wells Fargo Advisors after saying in late 2015 it would shut its U.S. “private banking” business.
Some brokers also are pressing arbitration claims alleging that they were falsely induced to join Credit Suisse and arduously build their books as it was quietly trying to sell the business.
Credit Suisse declined to confirm the asset transfers to Beech Hill or to comment on the protracted litigation with brokers and rival firms.
Joseph Weiss, a senior executive of Beech Hill Advisors, the investment advisor affiliate of Beech Hill Securities, said he understands that “some sort of combination” involving Credit Suisse accounts has occurred involving a “substantial amount of money.” He said he did not have details because the broker-dealer and the asset management arm are separate businesses with different ownership structures, aside from both being controlled by Paul Cantor.
Four other Beech Hill executives, including chief operating officer and alternative investments head Vincent Ianuzzi, said they could not comment on the Credit Suisse arrangements. Will Wurm, a partner and corporate secretary of the Beech Hill entities, did not return several calls for comment.
Cantor, who founded the investment management firm in 1987 and the broker-dealer arm through which it executes transactions in 1989, could not be reached. A person at the firm said he has been on vacation and his voicemail has been full and unable to receive more messages for the past two weeks.
Beech Hill Advisors manages $221.4 million in 552 accounts and also manages several funds, according to a March 2017 regulatory filing. Unlike Credit Suisse, which claimed that it worked primarily with very wealthy clients in its U.S. brokerage business, fewer than 25% of Beech Hill’s advisory clients are categorized as high net worth investors in the filing.