IFMI to Cut 20% of Workforce in PrinceRidge Restructuring

Institutional Financial Markets Inc. (IFMI) is cutting 20 percent of its workforce as the investment firm consolidates its PrinceRidge and JVB Financial Group units into a single broker-dealer.

PrinceRidge and JVB will operate under the JVB Financial brand once it receives regulatory approval, Philadelphia-based IFMI said today in a statement. That would mean the end of PrinceRidge, which was started by two UBS AG bankers in 2009. IFMI had 197 full-time staff as of Dec. 31, according to the company’s annual report.

“Taking these steps will allow IFMI to enhance profitability,” Chief Executive Officer Lester Brafman said in the statement. “Becoming a leaner and more efficient company means making a number of difficult decisions, including reducing the size of our workforce.”

PrinceRidge was among 70 debt-trading startups in 2009 that sought to capitalize on banks pulling back from markets amid the worst financial crisis since the Great Depression. Many of the younger firms have struggled in the past two years as larger companies reasserted their dominance and credit trading slumped.

IMFI will take a pretax charge of $2 million to $2.5 million in the fourth quarter for employee and vendor termination expenses, according to the statement.

IFMI reached a deal in 2011 to combine its capital markets unit with PrinceRidge to expand in debt sales and trading, and now owns most of the firm. Net trading revenue at PrinceRidge and other IFMI capital markets units fell to $38.3 million last year from $48.7 million in 2011, according to the annual report. The drop “was primarily due to the decline in trading revenue earned from trading in securitized products,” IFMI said in the report.

The firm said last year that PrinceRidge’s founders, former UBS bankers John Costas and Michael Hutchins, had left the company.

IFMI declined 2.6 percent to $2.26 yesterday in New York. The shares have gained 88 percent this year.

To contact the reporters on this story: Zachary Tracer in New York at ztracer1@bloomberg.net; Mary Childs in New York at mchilds5@bloomberg.net; Lisa Abramowicz in New York at labramowicz@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Christine Harper at charper@bloomberg.net

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