Beverly Hills-based City National Corp ($CYN) owns City National Bank, which has a wealth management arm controlling Convergent Wealth Advisors, an $8B Registered Investment Advisor (RIA).
On October 15th, Convergent's CEO David Zier committed suicide. He was a highly rated financial advisor, snagging a #1 ranking for the state of Maryland in 2013 from Barron's.
Long story, short: Zier had allegedly been managing a sizable amount of friends and family money outside of Convergent (usually a big no-no and a major headache to surveil) and his death on the 15th marked the bottom of the recent market correction. It was reported that Zier was under fire in early October as compliance found irregularities within his trade reports. It is said that Convergent's client assets are safe - but, well, reports seem to be mixed on that subject. Were Convergent assets also in the mix? That's probably the $64 question here.
At first glance this looks like somebody who blew up the accounts of his loved ones and could not deal with the grief it undoubtedly would cause. Add in the fact that Zier was being investigated and it gets more interesting.
One fact raises a major red flag. The CEO of an $8B wealth management firm killed himself and the firm has avoided addressing the situation and appears to be ducking RIABiz and Barron's. The FBI is involved and isn't commenting. The silence here is pretty notable.
Advisors lose client (and family) money frequently. The market goes up and down. Potential jail time does not come along so often. That is just a theory.
At best Convergent is an isolated incident with serious compliance issues and will likely see some wrist slapping or pay some fines and they'll lose a few clients and employees as the above linked articles seem to indicate. This scenario probably has no meaningful effect on City National Corp.
At worst, this is an issue reaching, or stemming from, the parent company. This is a major failure of supervision and a poor response. Should it be uglier than an isolated incident, one can imagine lots of scenarios, especially a major loss of AUM, whether or not they see 3 lettered federal agencies barking up their tree.
To me, if it's isolated to outside friends and family money then they (Convergent) would be majorly incentivized to wave the "all clear, we're squeaky clean here" sign to clients and employees. They have waved no such signal.
Here's a shiny summary of how great Convergent is, penned by its COO and Media Contact, Douglas Wolford. He even quotes himself.
$CYN seems to be unfazed and is mostly tracking with the market right now. It is near an all-time high and according to the Fed is the 38th largest commercial bank in the US. A lot more research to be done on this one. Just for reference, Uncle Bernie had about $17B AUM so this is potentially a sizable problem.
UPDATE: the ambulance chasers are already moving in.