Ex-Madoff brokerage attracts big players

Darin S. Oliver, owner of upstart Castor Pollux Securities Inc., last month agreed to pay up to $25.5 million for the only legitimate business in Madoff's fraudulent empire - buying and selling Nasdaq-traded stocks for large investors. The sale of the business was conducted by a court-approved trustee charged with raising money to repay Madoff victims.

Castor Pollux is a one-man operation run by Oliver, 47. Though he is relatively unknown in brokerage circles, Oliver's gamble on a venture few others wanted to touch has drawn some major players. Only two other firms bid on the brokerage, which many saw as tainted by the Madoff link.

Castor has hired Frank J. Petrilli, the former head of TD Waterhouse, to be chief executive, according to a regulatory filing. It has also recruited former Fidelity brokerage chief Robert P. Mazzarella as chairman. TD and Fidelity are two of the biggest US retail brokerages.

"Those are smart people. What they may see is an opportunity to put capital back to work in a market that's lost capital, particularly in the last year," said Mark Casady, chief executive of LPL Financial, an independent brokerage based in Boston.

Castor received financing from a Cambridge venture capital firm, Fairhaven Capital Partners, that spun out of a larger venture group.

Oliver and his coinvestors originally offered to pay $15.5 million for the Madoff business but raised the offer to $25.5 million after two other bidders emerged. Under the terms of the deal, Castor Pollux has to put up $1 million in cash when the deal closes, probably this summer. And it would pay up to $24.5 million on top of that over a period ending December 2013, based on revenues and profits. The owners are putting up additional money to hire people and rebuild the business, according to a person involved in the company. The Madoff name will disappear.

Madoff was one of the largest market makers on Wall Street before his arrest on Dec. 11. He was once the Nasdaq chairman.

Oliver did not returns calls seeking comment. He previously worked for hedge funds and traded commodities and derivatives for large firms. This new venture is a big jump, but one associate, who spoke on condition of anonymity because he was not authorized to discuss the deal, said Oliver is a risk-taker who saw the sale of the Madoff business as an opportunity.

He is launching the gambit from his home in Medfield. The company's website lists him as its only employee, and its phone number is his personal number.

That will all change, assuming the firm's application is approved by the Financial Industry Regulatory Authority, the overseer of brokers known as FINRA. The firm would be based in Manhattan, as was Madoff's, according to people involved in the deal. The venture backers will have a 50 percent to 75 percent ownership in the company and maintain financial control.

Petrilli, reached in New York, declined to comment. Mazzarella, who lives in the Boston area, also declined to comment. Paul Ciriello, a partner with Fairhaven, did not return a call seeking comment. Stephen Sussman, a New Hampshire businessman listed on the regulatory filing as an official of the firm, said he is handling compliance but was not authorized discuss the company.

Petrilli and the venture backers have another connection: The Fairhaven group spun out of TD Capital Ventures, part of Toronto-based TD Bank Financial Group. TD Waterhouse, which merged with Ameritrade in 2006, also is part of the Canadian financial giant.

Beth Healy can be reached at bhealy@globe.com.