A broker's battle
By KRIS HUNDLEY
© St. Petersburg Times,
TAMPA -- Regar Mickler once sat on National Association of Securities Dealers arbitration boards, listening to disputes between customers, brokerage firms and their salespeople.
Now Mickler, 60, expects to appear before the financial industry's self-regulating board to plead the case that he, a 34-year veteran of the securities business, was cut out of his most valuable account by a former employer, Prudential Securities Inc.
Mickler claims that when he took a leave of absence from Prudential's Tampa branch in April 2000 to be treated for prostate cancer, his account with Publix Super Markets was reassigned to a broker who had been recruited from a competing firm.
The Publix account, which Mickler had had for 15 years, was a portfolio of municipal bonds worth more than $500-million.
"The manager told me the new guy would do more with that account than I would ever do," said Mickler, a former Navy paratrooper. "I was mad as hell."
The manager of Tampa's Prudential office, Sean Farrell, as well as the broker who allegedly was given the Publix account, Corey Steadman, are identified in the arbitration claim but are not parties to the complaint. They both declined to comment and referred a reporter's calls to Prudential's headquarters in New York.
Prudential spokeswoman Susan Atran said the company thinks Mickler's claims have no merit.
"We were sympathetic while he was ill and kept him employed in good faith," she said. "We offered him his job back when we were notified by the insurance company that he was recovered, and he declined to return to work."
Atran refused to comment on the transfer of the Publix account to another broker.
Mickler's claim against Prudential, which asks for $25-million in damages, was filed in mid-May and probably won't be heard until next spring. But his disclosure of what usually are confidential arbitration claims provides a window into the way big brokerage firms operate.
Money and power rule. The weak are quickly replaced. And big accounts can become the focus of bitter battles.
"It's all about money and how much you bring in," said Mickler, who has been a commission-based salesman throughout his career. "That's the only thing they understand."
In the brokerage business, customer accounts legally belong to the firm, not the individual broker. And as long as the customer doesn't object, there is nothing to prevent a firm from transferring an account from one broker to another.
But veteran brokers say such transfers seldom happen. The firm has no reason to disrupt a profitable relationship between a broker and his client. When the broker is out for an extended period, the account usually is temporarily assigned to another broker with the clear understanding that it will go back to the original salesman upon his return.
Frank Lay, who was in the brokerage business for 40 years and managed the St. Petersburg office of A.G. Edwards, said he has never heard of a broker losing an account to a co-worker while out on sick leave.
"That was strictly a manager's decision and you wonder how much fairness was involved," he said. "It's not that the brokerage business is heartless, but there are heartless managers. A lot of times they're looking for pure profit rather than the welfare of their people."
Lay thinks Mickler's case has a chance of winning at arbitration. "He should definitely have a good case," Lay said. "Especially if there is evidence he intended to return to work."
Mickler, who had a radical prostatectomy during his six-month sick leave, said there was never any doubt that he intended to return.
"I left all my papers and personal belongings in my office credenza," he said. "I wouldn't have left everything if I didn't think I'd be coming back."
With his manager's approval, Mickler asked a fellow broker, 35-year veteran Andrew Fellios, to take care of his accounts while he was gone. "I told Andy that if I died, he could have my accounts," Mickler said. "But only if I died."
Mickler's arrangements were disrupted shortly after he left when his manager was transferred and replaced by Farrell. Farrell subsequently recruited Steadman from PaineWebber, where Steadman had done business with Publix.
It's unusual for a new broker to be able to bring over an account that's already being handled in-house, experienced brokers say. Wallace Boyd, who managed the St. Petersburg office of Bache and Co. for 40 years, said, "I'd just let recruits know that any of their accounts that we currently have in-house aren't theirs anymore."
That's not what happened at Prudential.
Mickler says Steadman was given a $3-million compensation package for joining Prudential, with the understanding that he would take over the Publix municipal bond account that had been handled by Mickler.
While out on sick leave, Mickler said he occasionally talked with Fellios about his accounts, but he was never told about the transfer of the Publix account to Steadman. It wasn't until he met with his new manager in late October to discuss his return that he discovered a big part of his business had been reassigned.
"I was told I could have a desk and a phone, but that under no circumstances would I be able to work on Publix issues," Mickler said. "I was astounded."
Mickler had other accounts, primarily wealthy individuals who had dealt with him for years. But none of them could compete with Publix.
Publix is considered the mother lode for brokers in Florida and nationwide, a lucrative gold mine of commissions that is spread among several competing brokers.
"Publix has accounts everywhere," said Mickler, who estimated the Lakeland grocery chain's total municipal bond portfolio at more than $750-million. "It was highly competitive business, but if you had a bond offering of a million or better and it was good quality, they'd usually buy them."
A spokesman for Publix, which is not a defendant in the arbitration claim, had no comment on the action or the allegations.
Mickler had snagged a piece of Publix's municipal bond business in 1985, thanks in part to a well-placed introduction by his brother-in-law, William Vass, who was once the chain's chief financial officer.
By the time he joined Prudential in 1995, Mickler brought along a Publix account consisting of about $35-million in bonds. While at Prudential, Publix delivered an additional $64-million in short-term municipal instruments that Mickler monitored until they matured or were delivered according to Publix's instructions. Mickler also set up maturity schedules and monitored Publix's larger bond portfolio, which was held by a bank. Total potential value of the account was $500-million.
Through 1998, Mickler made nearly $250,000 a year as a municipal bond broker, with Publix accounting for a substantial portion of his business. In 1998, he was named to Prudential's "Director's Council" for bringing in more than a half-million dollars in commissions. Mickler now keeps the plaque in a box, wrapped in tissue paper.
In 1999, with the stock market booming, the bond market lay dormant and Mickler's business with Publix and individual accounts declined. At the same time, he began to have health problems, and in early 2000, Mickler learned he had prostate cancer. He took sick leave that April and received disability payments until the end of October.
Faced with the prospect of returning to Prudential without his biggest account, Mickler started looking for a new employer. By early December, he was hired by Raymond James & Associates in Tampa.
Though about 30 of Mickler's 85 individual accounts have followed him to the new firm, Publix already was being handled by another Raymond James broker.
"I knew I wouldn't be able to go after the Publix account when I got to Raymond James because another guy already had it," Mickler said. "But I needed a job. I needed the insurance."
Mickler, a longtime Tampa resident, said the events of the past year have jolted his comfortable, privileged life. He depleted his savings, cashed in an annuity, sold his home at a loss and sold his wife's jewelry to cover expenses.
Though the experience of being treated for prostate cancer was frightening, Mickler said having his business cut out from under him was worse.
"This changed my life overnight big time," said Mickler, whose latest tests indicate he is cancer-free. "From late October to December last year was maybe the worst time of my life. Those were very dark times."
- Kris Hundley can be reached at firstname.lastname@example.org or (727) 892-2996.
A time line
Regar Mickler handled a municipal bond account for Publix Super Markets for 15 years before it was reassigned to another broker while he was out on sick leave.
1985: Regar Mickler develops a large Publix Supermarkets municipal bond account while working as a broker at Salomon Smith Barney.
October 1995: Mickler joins Prudential Securities in Tampa, bringing Publix account worth about $35-million. Publix later delivers an additional $64-million in short-term municipal bonds which Mickler manages.
1998: Mickler receives Prudential's Director's Council Award for bringing in more than $500,000 in commissions.
February 2000: Mickler learns he has prostate cancer.
April 2000: Mickler arranges for fellow broker to oversee his accounts, including Publix, while he takes sick leave.
June 15, 2000: Mickler has radical prostatectomy at H. Lee Moffitt Cancer Center in Tampa.
October 2000: Mickler learns that his Publix account has been assigned permanently to another broker at Prudential and decides not to return to the firm.
December 2000: Mickler starts work at Raymond James & Associates.
May 14, 2001: Mickler files arbitration claim against Prudential Securities with the National Association of Securities Dealers Regulation Inc., demanding $25-million in damages.
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