Southwest Securities' parent to double its advisor base, extend reach to CA. Dallas-based SWS Group has agreed to buy Beverly Hills, Calif.-based ML Stern & Co. and its subsidiary Tower Asset Management. The acquisition will double SWS' private-client advisor network and put SWS back in the investment-management business.

Terms of the deal, which is expected to close before the end of March 2008, weren't disclosed.

Stern is a wholly owned subsidiary of broker-dealer holding company Pacific Select Group -- which in turn is a subsidiary of Newport Beach, Calif.-based Pacific Life.

Southwest Securities

"This combination will significantly benefit all parties while meeting our stated objectives of growing both organically and through acquisitions," says SWS' president and CEO Donald Hultgren. "Going forward, our combined private-client groups will be positioned in two of the nation's most dynamic state economies, Texas and California."

Retail brokerage and fixed-income consultancy Stern has 112 advisors and about $4 billion in assets under custody, mainly for high-net-worth individuals. Besides its Beverly Hills headquarters it has five additional offices in California -- specifically in Carmel, Rancho Bernardo, Sacramento, San Diego and San Francisco -- and one in Las Vegas, Nev. Beverly Hills-based Tower has an additional $50 million in assets under management.

Stern's CEO Milford Stern says the tie-in with SWS gives Stern and Tower a chance to "benefit from the financial strength of a public company that offers a broad product mix and a desire to expand their presence in the retail marketplace." On the other side of the equation, SWS gets "a strong foothold in the high-net-worth California marketplace" while "Stern's historic focus on fixed-income products provides [SWS] the opportunity to grow" as baby boomers adopt defensive strategies for their nest eggs in preparation for retirement.

SWS owns clearing firm Southwest Securities, independent broker-dealer SWS Financial Services and Southwest Securities FSB, a community bank with branches in the Dallas-Fort Worth area. SWS' private-client group has eight offices in Texas, two in New Mexico and one in Oklahoma. -FWR

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