Shaw's future in doubt as Shapiro quits

The departure of Harold Shapiro, who until last year was a long-time managing director, has left the future ownership of the brokerage up in the air.

Yesterday he cited irreconcilable differences with the Shaw board for his decision to stand down and said he would sell his 27 per cent stake in the firm.

It is understood much of the disagreement has centered on bonus payments paid to the firm's new management over the past year as well as stalled merger talks that would bring in a new cornerstone shareholder into the firm. Calls to Shaw Stockbroking late yesterday were not returned.

The resignation leaves control of Shaw up in the air with few buyers inside the firm likely to take up Mr Shapiro's entire shareholding, valued at more than $4 million.

Over the past year Shaw is believed to have been involved in talks with several firms. These discussions, involving a full or partial sale of the business, have included Macquarie Group's private client arm, Ord Minnett, and the South African investment bank Investec.

Mr Shapiro said of his decision to resign from the board of the company he helped establish 18 years ago: "I'll be in a better position to act as a shareholder rather than as a director, as I now seek to sell my shares.

Under Mr Shapiro, Shaw grew from a staff of 40 in the early 1990s to more than 200. It now has offices in Sydney and Melbourne.

A sharp downturn in equity trading volumes in the past year has put mid-tier and smaller broking firms under intense pressure. Adding further headaches for smaller firms are new rules requiring brokers to boost the amount of funds to support their clearing functions.

Shaw's latest accounts show it turned around a $2.2 million loss in financial 2009 into a $941,000 profit in the latest year. Revenue increased 41 per cent to $44 million.

Shaw is one of the few mid-sized brokerage firms not being affiliated with a major partner. Bell Potter counts UBS as a part owner, Deutsche Bank has a stake in Wilson HTM, Credit Suisse owns part of EL&C Baillieu, and JPMorgan is aligned with Ord Minnett.