GunnAllen founders jumping to rival broker-dealer in wake of firm’s collapse

After watching the fall of GunnAllen Financial Inc. become official this morning, the firm’s founders —Donald James “Jay” Gunn and Richard Allen Frueh —are apparently moving to a rival broker-dealer.
The co-founders of the firm intend to move to J.P. Turner & Co. LLC, which is circling to gather up GunnAllen’s reps.
GunnAllen failed to open this morning after the Financial Industry Regulatory Authority Inc. told the firm last week that it did not have enough capital on hand to do business. (Click here to read the earlier version).
Another broker-dealer interested in some of GunnAllen’s 400 remaining reps and advisers is Aegis Capital Corp. of New York, industry sources said. That firm’s CEO, Robert Eide, did not return phone calls today to comment.
GunnAllen’s clearing firm, Ridge Clearing and Outsourcing Solutions Inc., controls the clients’ accounts. Clients can close or liquidate the accounts but can’t make any type of transactions.
Along with GunnAllen’s two founders, J.P. Turner is also in discussions with a number of GunnAllen’s brokers, said Turner chief executive Tim McAfee. GunnAllen, which was based in Tampa, cleared through Ridge, as do J.P. Turner and Aegis.
“There have been a lot of phone calls, and we are talking to some of GunnAllen’s reps,” Mr. McAfee said, declining to specify further. “I do believe Frueh and Gunn will join J.P. Turner.”
It was not clear whether J.P. Turner will be paying Mr. Gunn and Mr. Frueh based on the number of advisers that follow them. Neither answered phone messages Monday afternoon.
Problems with investor lawsuits — totaling as much as $50 million — likely drove GunnAllen to collapse. The firm faced suits stemming from the sale of Provident Royalties LLC private placements, offerings that J.P. Turner advisers also sold.
Last week, Finra expelled the broker-dealer instrumental in marketing those deals, Provident Asset Management, for its role in a $475 million Ponzi scheme, the regulator said.