ConvergEx Bermuda Subsidiary Probed

ConvergEx Group today [Dec.24] announced the company and CVC Capital Partners have terminated their pending merger because of parallel investigations by the US Securities & Exchange Commission and Department of Justice into a Bermuda subsidiary of the technology firm.

The transaction, announced on July 20, 2011, provided for ConvergEx to be acquired by funds advised by CVC.

ConvergEx said the US Securities & Exchange Commission and Department of Justice are probing “certain non-electronic trade execution practices” conducted through its Bermuda subsidiary, ConvergEx Global Markets.

The unit is projected to generate approximately 7% of the company’s total revenues in 2011.

“We want to thank CVC for their interest in partnering with ConvergEx. While we regret that a transaction could not be consummated at this time, the Company’s obligations to focus on the regulatory questions raised by the inquiries made it difficult to execute the transaction at this time,” said Joseph M. Velli, Chairman and Chief Executive Officer of ConvergEx.

Mr. Velli said, “Since becoming aware of the matters under review, we have taken strong actions to remedy any lapses that have occurred. We are taking additional steps to ensure that we are in full compliance with our own policies and procedures as well as all other regulatory requirements.”

The Audit and Risk Committee of the company’s board of directors has retained outside counsel to conduct a thorough review of the facts.
The Committee stated, “We take all regulatory questions seriously, and we have zero tolerance for misconduct by any employees of the Company. The credibility of the Company is paramount and we look forward to reaching an appropriate resolution.”

Mr. Velli concluded, “We are focused on running our business and continuing to provide our clients with the high quality services on which they rely. This is a highly diversified company, and we are on track to have a strong year. Our balance sheet is the strongest that it has ever been. We have discussed this development with our major shareholders, who remain committed to the Company’s growth strategy, organically and through acquisitions.”

ConvergEx Group, based in New York, is a leading technology company providing mission-critical proprietary software products and technology-enabled services to asset managers and financial intermediaries globally.

#BermudaBusiness #BusinessMergers #ConvergEx

Category: All, Business, technology