Three co-founders of Springfield wealth advisory Walnut Capital Management LLC were terminated by their broker dealer Wells Fargo Advisors Financial Network LLC last July and are no longer licensed as brokers with the Financial Industry Regulatory Authority.
FINRA, which writes and enforces rules for advisers selling stocks and mutual funds, now lists John Handy Jr., Jonathan Timson and Dennis Robin Walker as investment advisers with Springfield-based SignalPoint Asset Management LLC.
According to FINRA, the three managing partners of Walnut Capital were fired by Wells Fargo July 26 for “failure to disclose the nature and extent” of their relationship with SignalPoint.
Springfield Business Journal’s calls to the three partners, as well as to SignalPoint President and CEO Michael Orzel, were not returned by press time. Timson, who is listed as the marketing director with SignalPoint on SignalPointInvest.com, did return a call but could not be reached by press time. The website identifies Handy as senior portfolio strategist and managing director, and Walker is listed as managing director.
RIA appealWalnut Capital, which operates at 1201 E. Walnut St., now offers investment advisory services through SignalPoint, according to
WalnutCapitalManagement.com.
Stephen Evans, a certified financial planner and owner of Springfield-based Evans Wealth Planning LLC, said while he doesn’t know the specifics of the Walnut Capital partners’ situation, broker dealers typically don’t like their brokers selling products not offered through them. The practice, called “selling away,” is prohibited by FINRA.
“With my broker dealer, I am not allowed to sell investments not approved by my broker dealer. So, if I want to go away and sell or partner with another company, that has to be approved,” said Evans, a broker with NFP Securities Inc.
He said selling away is prohibited as a way to protect investors from advisers who might pitch questionable investments.
Evans holds Series 7 and 66 licenses, which means he can sell stocks, bonds, mutual funds and investments. To sell those products and direct investments, Evans said he has to sign on with a broker dealer, become a broker dealer or become a Registered Investment Adviser. RIAs, he said, earn money through fees instead of through commissions.
“There’s a lot of different ways to do this business, but if you are attached to a broker dealer, you can only sell what they have,” Evans said.
“But most broker dealers – Wells Fargo is a huge company, and my dealer is a big company – offer almost every investment out there.”
SignalPoint is an RIA with the Securities and Exchange Commission, and Evans said Walnut Capital’s move to an RIA represents a change in the way the firm does business. He said every situation is different, and a move to an IRA would impact investors.
“A lot of advisers get rid of their broker dealers in order to start RIAs,” Evans said.
Long historyAccording to SBJ archives, SignalPoint has long had ties with Walnut Capital Management. Before a 2010 move to 400 South Ave., SignalPoint opened its doors in August 2008 in leased space at Walnut Capital Management’s building, the former Askinosie Law office.
In a 2010 report, Timson told SBJ Walnut Capital informs its clients about SignalPoint’s “easy to understand” investment options.
Through various platforms, SignalPoint uses exchange-traded funds to diversify client portfolios.
The move by the Walnut Capital partners to become investment advisers appears to fill a hole left by the exit of a former SignalPoint co-owner in 2012.
In 2010, Skip Motsenbocker was a co-owner and the managing director of SignalPoint, but according to his LinkedIn profile, he joined Potomac Fund Management Inc. in the greater San Diego area in November after previously working for Black Ink Consulting in San Diego for nearly three years. His profile says he left SignalPoint in August 2012.
Handy, Timson and Walker started Walnut Capital in March 2007 offering services through Wachovia Securities Financial Network, according to SBJ archives.
The partners collectively had prior experience working with Morgan Stanley and Merrill Lynch.
