Tampa's GunnAllen brokerage firm has long endured a bad-boy image, hiring brokers others might pass on, in the name of fast growth.
So it was all the more curious when Tampa philanthropist John Sykes, founder of Sykes Enterprises whose name graces the University of Tampa's College of Business, led an investor group in late 2008 to buy into the financial firm. His plan? To pluck GunnÂAllen from mediocrity and build a higher-quality financial firm.
Then Sykes suddenly backed away from GunnAllen. He left its board late last year and began to build a separate financial firm to be called JHS Capital Advisors. As regulatory concerns about GunnÂAllen accelerated, Sykes kept mum — even after the company was closed down on March 22 for a lack of capital.
Sykes, 73, on Tuesday went public, laying out his take to the St. Petersburg Times on what happened at GunnAllen.
Sykes has good reasons for breaking his silence, not just because a lot of people are asking him.
First, with GunnAllen now shuttered but still in legal hot water, Sykes wants to distance himself from a firm where he was a major investor and even served briefly as CEO last year.
Second, coverage of GunnÂAllen's demise in trade publications was not on the mark in Sykes' view, and he wants to set the record straight.
And third, Sykes soon will unveil his JHS Capital Advisors, marketing it as a high-integrity wealth management and brokerage firm. He wants his role in the GunnAllen controversy to be history by then.
Sykes says GunnAllen's past expansion was marked by debt and "hiring brokers with less-than-stellar backgrounds." Among them: Frank Bluestein, charged with a Ponzi scheme that defrauded investors and left GunnAllen exposed to millions in lawsuits.
When GunnAllen needed fresh funding, Sykes says he was approached in mid 2008 to consider investing. Sykes figured $10 million and better managers could cover the firm's legal exposure and still get it back on track.
As problems snowballed, Sykes committed $1.8Â million more. In September 2009, when GunnAllen bought Pointe Capital, Sykes added $1.2 million more.
By last fall, Sykes says $11Â million of his $13 million stake was being consumed just by legal claims. That's when Sykes realized GunnÂAllen could not be salvaged and resigned from the board.
Still, Sykes says he put in yet more money to buy the firm some time. Sykes' purchase of Pointe Capital from GunnÂAllen provided still more cash to the needy firm.
But by early 2010, GunnÂAllen's finances worsened. On March 12, Sykes pitched how his investor group could buy up $2.2 million of the firm's assets. No response.
By March 19, a Friday, GunnÂAllen suddenly asked Sykes' group to buy all or part of firm. Why? Because regulators insisted GunnAllen have $1Â million in new capital on hand by March 22, a Monday.
That did not happen. GunnÂAllen failed that Monday, ending Sykes' dream of reviving the Tampa firm in which he had invested millions.
Undeterred, Sykes is well into his next project, the coming launch of JHS Capital Advisors. Its goal: to be what GunnAllen might have been.
Robert Trigaux can be reached at email@example.com.