Cavner plans to launch independent firm

Days after disassociating with BancorpSouth, and while facing disqualification by federal regulators, Springfield financial adviser Nadia Cavner announced her intention to start an independent firm under the name Nadia Cavner Group.

Cavner plans to open the investment services firm May 6 at 2659 E. Normandy St., Ste. 108, immediately southeast of the 2620 E. Sunshine St. BancorpSouth branch where she had practiced for eight years. She detailed the plans in an April 26 news release issued the day after BancorpSouth officials replaced the Nadia Cavner Group signage at her former office.

“I am very blessed by the tremendous support of my family, friends and clients as I begin this exciting endeavor and look forward to continuing to provide exceptional service to my clients,” Cavner said in a statement provided by her public relations and marketing firm, 2 Balance LLC. Cavner declined an interview through 2 Balance owner Sheri Hawkins.

Advisers and partners
While it is unclear how much business would carry over from BancorpSouth – where Cavner managed some $490 million for roughly 1,100 household clients – she has assembled a prominent advisory board.

The members named on a list provided to Springfield Business Journal are Larry Allhands, Steve Coulter, Ron Herschend, Ed Hershewe, Carol Jones, Barclay Newman Jr., Jean Newman, Dennis O’Dell, Dr. Nancy O’Reilly and Tom Strong.

On April 12, Cavner pleaded guilty in federal court to a felony interstate stalking charge in Memphis, Tenn., acknowledging intentions to injure, harass or intimidate her college-age daughter’s ex-boyfriend. Two weeks later, BancorpSouth severed its ties and released this statement on April 26: “Mrs. Cavner is no longer associated with BancorpSouth,” said Randy Burchfield, BancorpSouth senior vice president of corporate communications. “Our Sunshine Street office remains open to assist our clients with their financial and investment needs.”

Cavner, who holds a Series 7 license to sell securities, remains an independent contractor with Iowa-based brokerage group Cambridge Investment Research Inc., said Cindy Schaus, a Cambridge spokeswoman. Schaus declined further comment.

Regulatory steps
According to U.S. securities regulations, a felony would statutorily disqualify Cavner from selling securities in the U.S. for 10 years. According to Financial Industry Regulatory Authority rules, financial advisers are obligated to report criminal actions involving felonies to securities regulators within 30 days of charges being filed or the plea agreement being signed. Under those conditions, Cavner must disclose to FINRA both the felony charge and the plea agreement by May 12.

As of May 2, FINRA had not posted Cavner’s disclosure of the felony plea or charge on its Broker Check portal, which is updated daily. To date, Cavner has faced three disclosure events between 2002 and 2009 from customers who took issue with Cavner’s advisory practices, but each was dismissed. The complaints, two regarding Cavner’s handling of mutual funds and the third a variable annuity, sought nearly $120,000 in damages combined.

FINRA spokeswoman Michelle Ong said advisers have a right to appeal disqualification through eligibility proceedings, during which advisers would retain their licenses.

Cavner’s Memphis, Tenn.-area attorney, Steven Farese Sr., has said he is working with regulators on Cavner’s behalf to determine whether she can continue to sell securities.

According to FINRA, a 10-member statutory disqualification committee comprising eight securities industry members and two nonindustry representatives, would meet after an eligibility hearing to consider the adviser’s application to continue selling securities.

The committee then sends its decision to the National Adjudicatory Council, which typically makes the final decision on FINRA’s behalf. However, the FINRA Board of Governors could call the matter for review.

FINRA’s critical inquiry in every case is the same: “whether the admission of the disqualified person or member would be inconsistent with the public interest and the overriding regulatory goal to ensure the protection of investors.”

According to FINRA’s rules, the eligibility proceedings may be accelerated in certain cases when parties involved agree to conditions that would govern a disqualified person’s association. In these cases, a hearing would not be conducted and the period of the NAC’s review could be significantly reduced.

Ong said information regarding the frequency of FINRA hearings and disqualifications was not available by press time.

If FINRA approves an application, the U.S. Securities and Exchange Commission must review and approve that decision before it takes effect. In most cases, the SEC’s review and approval takes 30 days. In some cases, however, the SEC scrutinizes a particular application by requesting more information or by requiring other restrictions on behalf of the firm, according to FINRA, steps that could extend the case to 60 days or longer.

If FINRA denies Cavner’s application, she would have the right to appeal to the SEC, and that process could take several months or more.[[In-content Ad]]