This may be the worst of times in the modern history of the financial services industry, but Wedbush Morgan Securities Inc., a small investment bank in downtown Los Angeles, has proceeded as if it's the best of times.
Since summer, the company has made three acquisitions, opened several branch offices and added 200 employees. And in what may be its boldest move, its parent company, Wedbush Inc., now wants to go public, perhaps even as early as this year although it likely will be later.
Founder Edward Wedbush said last week that the firm could benefit from a public offering, and it already has begun exploring the possibility.
"Our philosophy is to become a public company," said the 76-year-old executive. "We will logically become a public company somewhere downstream, but we have to get past all of this worldwide financial turmoil."
In addition to Wedbush Morgan, the parent company also owns private and public equity funds, and a small commercial bank that opened in February.
Though the company has not officially begun preparing an IPO filing and Wedbush said it could be more than a year before it begins its structure is similar to that of a public company, which could make the transition simpler.
"We're already prepared: Our boards of directors are outside directors; we run it as if we were a public company; we have all the audit committees and other risk management activities," he said.
If the company went public it would be unusual because the IPO market, which hasn't been strong in recent years, all but disappeared in recent months, said James Cameron Spindler, a USC law professor and IPO expert. Also, Sarbanes-Oxley and other regulations can make life tough for newly public companies.
"Going public imposes some pretty onerous requirements on public companies you're subject to a whole bunch of regulations," he said.
The IPO market has not been particularly strong since the technology bubble burst in the early 2000s, he said.
"It hasn't been a very good environment for initial public offerings in the United States in the last few years."
Climbing the ladder
Founded in 1955, Wedbush Morgan has become one of the leading correspondent clearing services in the Western United States. The company provides a range of services, but its bread and butter is in processing stock trades for broker-dealers.
In December, Wedbush Morgan ranked as Nasdaq's top liquidity provider, or market maker, beating out big-time rivals such as Morgan Stanley (No. 2) and Goldman Sachs & Co. (No. 5). Wedbush Morgan has been at or near the top of that list for more than two years.
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