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Ailing Brokerage Sees Capital Infusion Soon

March 19, 1997|From Bloomberg News

Troubled Los Angeles-based brokerage firm Boston Group LP said Tuesday that it has reached two preliminary agreements for capital infusions that will enable it to return to financial health and resume normal operations.

The firm failed to meet a $250,000 minimum net capital requirement last week, forcing it to halt normal business. The requirement is set by national regulatory agencies.

Boston Group said it may be able to resume normal operations this week if the proposed transactions are completed and receive regulatory approval. Another condition is that the company must pass due diligence by the investors.

An investor group including Joseph M. Salvani has tentatively agreed to buy an unspecified equity interest in Boston Group. Salvani is a former Goldman, Sachs & Co. analyst and a former general partner of Steinhardt Partners.

Also, Wexford Management LLC, an investment management firm in Greenwich, Conn., has tentatively agreed to provide new capital in the form of subordinated debt.

"We are proud to be joined by such experienced and professional investors and appreciate the confidence they have shown in our firm," Boston Group Chairman Robert DiMinico said.

Since Thursday, Boston Group's 125 stockbrokers have had to stop soliciting trades from the firm's 15,000 clients in order to remain in compliance with regulations. That brought business to a virtual halt, executives said.

Boston Group stopped making a market in 50 stocks, including stocks of six Los Angeles-area companies that it has brought public since 1995.

The firm said last week that sharp declines in some of those stocks eroded its net capital, because the firm held sizable inventories of the shares.

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