It looks like Dallas broker-dealer SWS was less distressed than would-be merger partner Sterne Agee hoped...even though the distress was admittedly fairly substantial.
SWS announced yesterday that it's paid $650,000 to settle charges that it negligently allowed a corresponding firm, Cutler Securities to create a massive naked short position on an unspecified stock.
Cutler then defaulted on the short, leaving SWS exposed to a $6.3 million loss. But FINRA still came after the firm for lack of oversight.
But while the fees -- and the losses -- hurt, SWS is not desperate for a "white knight" here. The company also announced that it's found $100 million in equity financing to shore up its troubled banking unit.
When you consider that Sterne Agee was only willing to spend $200 million to buy the entire company, SWS is in much better condition now than just about anyone thought.