Advanced Equities, the Chicago-based venture capital investment bank and former owner of independent b/d First Allied, is pushing Dwight Badger, co-founder and CEO of the firm, out the door, according to published reports. Crain’s Chicago Business reports that the Badger and Advanced Equities have come to a separation agreement. Badger did not return a call seeking comment.
The news does not come as much of a surprise given the negative events surrounding the firm lately. Earlier this year, co-founders Badger and Keith Daubenspeck were served with Wells notices by the Securities and Exchange Commission, notifying them that the staff may take enforcement action related to a private offering from 2009. As of now, no charges have been filed.
“I am addressing the staff’s concerns and I am prepared to aggressively defend myself should it become necessary,” Badger said, in a FINRA filing.
It’s unknown whether Daubenspeck will resign or step down also.
The troubles for the firm haven’t stopped there. Earlier this month, a FINRA arbitration panel ordered Advanced Equities, Chairman Keith Daubenspeck and CEO Dwight Badger to pay John Galinsky, a former AEI broker, $4.5 million in compensatory damages. Galinsky claimed they failed to pay certain commissions on Bloom Energy, Arbinet, Alien Technology, Infinera, ForceIO Networks, Peregrine Semiconductor, and Motricity. The panel found that “respondents exhibited a reckless disregard for the warrant rights of the broker and breached their fiduciary duties to the broker.”
Advanced Equities has its roots in venture capital and private equity deals, which it sold through its retail broker arm and its former independent broker/dealer, First Allied Securities. First Allied spun off from Advanced Equities in August 2011 to focus on its core business—helping its 1,000 advisors grow their practices. It also wanted to distance itself from the private equity focus, sources said.
Fisker Automotive, one of the private offerings that Advanced Equities has backed, is also causing problems for the firm.
Advanced Equities is 25 percent owned by Apex Venture Partners. George Middlemas, general partner at Apex Venture Partners and director of Advanced Equities, did not return a call seeking comment. My guess is he can’t be happy with the investigation into Advanced Equities and the bad press Badger is drawing. The whole ordeal is just more proof that First Allied got out at the right time.
