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L.A. stock brokerage Crowell Weedon is bought by rival

The acquisition by D.A. Davidson is expected to strengthen each firm. Combined, they will hold $43.5 billion in client assets.

May 02, 2013
  • Andrew Crowell of Crowell Weedon, the L.A.based brokerage cofounded by his father decades ago.
Andrew Crowell of Crowell Weedon, the L.A.based brokerage cofounded by… (Gary Friedman, Los Angeles…)

Los Angeles stock brokerage Crowell, Weedon & Co. on Wednesday said it was acquired by a larger rival, though terms were not released.

Chief Executive Andrew Crowell said his firm was bought by D.A. Davidson & Co. The deal would further strengthen the firms, Crowell said. Combined, they will hold $43.5 billion in client assets, with Crowell Weedon bringing in $9 billion of that.

Discussions of a combination began about three years ago, Crowell said, but really took off in the last year and a half. Both firms said they don't plan to close any of their offices. Crowell Weedon has 14 offices in Southern California. There is overlap in operations and support areas, however, so there may be reductions there but growth in other areas as a result of the merger.

"We looked at our similarities, cultures and firms' geography and thought the fit made sense," Crowell said.

Jim Kerr, president of Davidson, said the move will further the reach of the company, which is based in Great Falls, Mont. Davidson has offices in Denver and Seattle.

"We see Los Angeles as the next regional hub center for D.A. Davidson," Kerr said.

Six months ago, Crowell Weedon said it lost more than $3 million on credit default swaps tied to the housing market in 2012. The loss was initially estimated at $3 million and later increased to as much as $4 million on an investment of $6 million.

But the company denied that had anything to do with the sale.

"We did have a sizable loss, but that didn't affect or impact our client assets at all," Crowell said. "It was not a reason behind our decision to strategically combine with Davidson."

Still, a loss of $3 million to $4 million could push a small firm to merge, said Dick Bove, an analyst at Rafferty Capital Markets.

"A hit of that size could reduce their capital to the point where they're forced to merge," Bove said. "Small firms don't put money up against transactions, therefore they don't need a lot of money to stay in business, but if they lose what they have then it is definitely a big problem."

adolfo.flores@latimes.com

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