RW Baird vs. Upstart
Very interesting story in today's Milwaukee Journal-Sentinel about an upstart broker-dealer making allegations of improper IPO trading by several RW Baird execs:
http://www.journal-sentinel.com (I think)
Go to the business section.
RW Baird's CEO is Phil Purcell's brother.
This has been something I have been following since they tried to do a lift-out in May as I work with a couple of institutional money managers in the area. The two heads of Red Granite, tried to lift the assets out of Baird, but ran into a court injunction and have not had success at this point. From what I've read, I don't know if they have a leg to stand on in this case. The equity side is the one that took the hit as that is where the 13 Porfolio Managers and Analysts came from, but they have recovered very well and restructured accordingly. Red Granite should do well as the managers are experienced and have built a good name for themselves in the marketplace, but it may end up taking more time than initially planned.
I wasn't aware of this until today.
Was reading the Journal-Sentinel to see what they had to say about Banta (BN:NYSE) and Cenveo (CVO:NYSE) and came across this. I figured some folks over here might have interest in it so I posted it.
A lift-out takes place (and bear with me) when a mutual fund company or institutional money manager will, essentially, buy or pay for the entire fund and/or track record of a managed product or mutual fund. The acquiring company (many of which are start-ups), will then be able to bring their performance track record with them, as most firms consider this proprietary information.
For example, Artisan just did a lift-out of DuPont and acquired their Emerging Markets fund. What this does is bring those mutual fund managers and analysts with the fund (often housed in the current location), along with the track record and assets. The firm that was departed, will typically be compensated in some way for this.
In some instances, fund/institutional companies are able to perform a lift-out without paying for this information, if the non-compete has some holes. In this instance, as I believe is what happened with Baird and Red Granite, the original firm will issue an injunction against either the newly created or newly joined firm that will prohibit them from selling their track record or soliciting previous clients, until they have settled through arbitration.
The descrption may be alittle rudimentary, but that is the jist of it. This will affect the Baird Investment Management division (equities), vs. the Baird Advisors division (fixed income). The affects on the financial advisory side will not be felt by this. It is a pretty interesting story, though. I've seen lift-outs happen peacefully most often when a fund or product is sub-advised. The assets have still stayed at BIM in this instance, and RG is working to build their own track record, until things have settled.
Thanks for the explanation.
Would it be okay if I forward it to the woman who wrote that story?
All of that info (and probably more of it) would be available through other articles. I don't really care, at the end of the day. Do you know her or something?
No, but I am into educating the media (especially local reporters) as to how our business really works.
I would recommend they speak with someone at BIM or Red Granite. They would be able to give much more insightful info. It's a unique story to follow, though.
Okay, thank you and have a nice weekend.
I think it's an interesting story, too.
Yesterday's WSJ (page C1) had a Sue Craig story about this matter. They go to court the end of this coming week.
More on RW Baird versus Red Granite:
(hope this link works)
Update on RW Baird versus Red Granite: