[ by Melanie Gretchen ]

Investment bank Rodman & Renshaw, as of this month, is out of the brokerage business. FINRA cited the brokerage firm in August for crossing “information barriers” between its research and investment banking operation and wasfined $315,000.  Since then, the firm underwent internal changes and assumed a new direction.

What Happened: A Timeline. Rodman & Renshaw Capital Group first changed its name to Direct Markets Holding Corp. on 6/1/12.  The Direct Markets platform was launched in February.  Although Rodman & Renshaw was to be the only investment bank to effect securities transactions on the platform, the firm decided the Direct Markets venue for connecting stock issuers with investors should be open to all investment banks.

• August 28: Kevin Lupowitz resigned from the company board of directors and in September did not assume the CEO role of the parent company, as had been previously announced. Edward Rubin is currently CEO.
• September 12: The subsidiary of Direct Markets Holdings informed FINRA that it was no longer in compliance with the SEC’s Net Capital Rule 15c3-1, and as a result would cease conducting its securities business, other than liquidating transactions.
• September 14: Rodman & Renshaw submitted Form BDW – the Uniform Request for Withdrawal of Broker Dealer – according to a notice filed with the SEC.

FINRA's Earlier Sanctions. Rodman's former CCO (chief compliance officer) William Iommi Sr., accepted a $15K fine and a 90-day suspension from all principal responsibilities;  he also must requalify as a Series 24.    In addition, 2 research analysts were also sanctioned.

As for the firm, FINRA said Rodman failed to properly supervise interactions between researchers and investment banking staff.  In at least 2 cases, FINRA alleged that a research analyst participated in efforts to solicit investment banking business.

A Future in Direct Markets? Going forward, the parent company said it still will attempt to commercialize its Direct Markets electronics platform.  Direct Markets also is developing additional "financial technology applications" that it will market.

For further details, go to [Traders Magazine, 9/18/12].