Boutique Firm Jumps into Small Debt, Bond Deals
Art Okun says finding a niche, whether in his career or investments, is his specialty.
After more than 10 years of working as a stockbroker for other firms, the African-American financial consultant figured retail investors in Orange County were underserved when it came to private placements of bonds and other investments.
In most cases, only the wealthiest clients of large brokerages could get in on private placement deals.
“Small clients are left out,” said Okun, senior partner and chief executive of Irvine-based Canon Securities LLC.
So Okun decided to open his own broker-dealer firm catering to private clients seeking to invest in privately placed deals. A native of Nigeria, Okun started Canon Securities in January with partner Wesley Kelley. The firm counts nine employees.
Back to OC
Okun lived in OC in the late-1980s and returned after a four-year stint at Minneapolis-based Juran and Moody Inc., a municipal bond underwriting firm.
As an African-American in OC, Okun is unique,blacks make up less than 2% of OC’s 2.8 million people. He’s just as atypical in OC’s financial services industry, which is dominated by whites and a few Asians.
Okun said that being an African-American has never been a stumbling block. Even so, most of his clients are “everyone else” but African-Americans, he said.
“In fact, I have very few African-American clients,” he said. “Wherever I have been, there were very few African-Americans, be it Minneapolis or Orange County. Everybody wants to make money, they don’t care where or from whom they get it.”
Canon Securities does all the run-of-the mill services for clients, from buying and selling municipal bonds, U.S. Treasuries and stocks. But the firm’s specialty is private placement of fixed-income instruments that yield high interest rates.
Canon clients, for one, can indirectly invest in film financing by buying privately placed bonds of small movie-making companies, which yield more than 12%. Currently, the firm is marketing debentures of a film producer that gives 13% interest.
“The debentures give an extra 13% bonus if the movie is a hit,” Okun said.
Clients at large brokerage firms typically don’t have access to such offerings because the size is relatively small. The debenture offering of the movie company is around $5 million.
Canon also offers clients annuities and other insurance products.
“What I have to focus on is doing good due-diligence in private placement,” he said. “After all, I have to compete with large brokerage firms.”
Cannon tries to balance its client’s portfolio with high-risk investments on the one hand and zero to low-risk municipal bonds on the other.
According to partner Kelley, who’s also Canon’s chief financial officer, the firm follows The Markowitz Efficiency Frontier, a portfolio management theory developed by Nobel Laureate Harry Markowitz. The theory tries to maximize risk and reward and theorizes that a diversified portfolio has a higher risk-to-reward benefit.
Canon is one of several small boutique broker-dealer firms in OC.
Overshadowed by larger national firms, boutiques are once again doing well in as they offer more customized services. There are an estimated 70 small broker-dealer firms in OC and some 2,500 in the country. A boutique broker-dealer firm also has lower cost overheads, a selling point for clients.
Started Selling Computers
Okun came to the U.S. from Nigeria, where he was raised. He first studied in Belgium and came here in 1979.
“Back in 1975, there were only seven universities in Nigeria, so I went to Belgium and finally came here,” Okun said.
He got started selling computers. In 1983, after finishing his under graduate studies in economics and finance from Augsburg College in Minneapolis, he joined Unisys Corp. But he said his passion for finance and investments made him switch careers.
He joined the Los Angeles office of New York Life Securities in 1988. In 1994, he moved to Minneapolis to work for Juran and Moody and returned to Southern California in 1998. n
