Penson

A board member of Penson Worldwide Inc. resigned Thursday after the company's disclosure of his relationship to a large, illiquid bond position held by the company, which sent shares in the clearing-and-settlement firm to an all-time low.

Director of Clearing Firm Penson Resigns Amid Collateral Disclosure Jacob Bunge 2011

Penson shares fell 81 cents, or 21%, to $3.12 in 4 p.m. trading on the Nasdaq Stock Market.

Director of Clearing Firm Penson Resigns Amid Collateral Disclosure Jacob Bunge 2011

Mr. Pendergraft, the Penson CEO, is expected to attend a stock-options industry event Thursday in Savannah, Ga., where some clients are expected to discuss the matter with him.

Director of Clearing Firm Penson Resigns Amid Collateral Disclosure Jacob Bunge 2011

Penson reported this week that it held as trading collateral $42.6 million in bonds issued by a horse-racing track operator that maintains ties with director Thomas R. Johnson , which the company said in a filing this week could bring a "material" write-down.

Director of Clearing Firm Penson Resigns Amid Collateral Disclosure Jacob Bunge 2011

"Penson Worldwide remains strongly financed, with ample excess regulatory capital and a solid business, and none of this affects or involves any correspondents or their customers," Philip Pendergraft , chief executive of Penson, said in a statement.

Director of Clearing Firm Penson Resigns Amid Collateral Disclosure Jacob Bunge 2011

"We believe that a significant risk to Penson is that the new disclosures affect its correspondent clearing customers."

Director of Clearing Firm Penson Resigns Amid Collateral Disclosure Jacob Bunge 2011

"While we believe that Call Now's use of RDC bonds as collateral for margin loans could have reasonable explanations, Penson's exposure to $27.8 million of other Retama bonds raises questions about how the concentration of risk developed," Mr. Repetto wrote in a research note Thursday that warned of competitors poaching Penson's existing customers and potential clients taking their business elsewhere.

Director of Clearing Firm Penson Resigns Amid Collateral Disclosure Jacob Bunge 2011

Raising further questions was the relationship of Mr. Johnson, the Penson director and chief executive of Call Now Inc., which manages the racetrack and owns $15 million of the Retama Development Corp. bonds, according to Sandler O'Neill analyst Rich Repetto; Call Now was an early investor in Penson.

Director of Clearing Firm Penson Resigns Amid Collateral Disclosure Jacob Bunge 2011

The company estimated that the Retama bonds represented just 0.5% of Penson's $8.7 billion in average daily customer balances during the first quarter.

Director of Clearing Firm Penson Resigns Amid Collateral Disclosure Jacob Bunge 2011

Penson expects to "resolve" the collateral matter without a loss, the company said, but even if a loss were realized, it wouldn't affect the company's financial condition or the amount of money it needs to have on hand to satisfy regulations.

Director of Clearing Firm Penson Resigns Amid Collateral Disclosure Jacob Bunge 2011