Grassi eliminates its SEC practice in response to Sarbanes-Oxley; partners and staff affected by...

Two partners at Grassi & Co. of Lake Success, N.Y., moved to Long Island competitor Marcum & Kliegman of Woodbury as both firms respond to the Sarbanes-Oxley Act by repositioning their SEC audit practices.

Grassi (FY02 net revenue: $12.5 million, eight partners, 100 total staff, two

offices) is eliminating its SEC audit practice, while M&K's is expanding, say MPs at each firm. Stephen Feldman and Philip Weiner join M&K as partners. They bring 25 SEC clients and about $3.5 million revenue, says Jeffrey Weiner, MP at M&K (FY02 net revenue: $32 million, 25 partners, 275 total staff, four offices). The number of staff going from Grassi to M&K is unclear: Weiner says 15; Grassi MP Louis Grassi says seven.

Neither Weiner nor Grassi would disclose terms of the structured deal, but Weiner says the move leaves his firm with 70 SEC clients. M&K is targeting middle-market SEC companies with $1 billion or less in annual revenue.

Grassi plans to replace the SEC audit revenue with a corporate governance practice and related consulting work and will keep its Manhattan office. "This has everything to do with Sarbanes-Oxley," Grassi tells BOWMAN'S. "SEC audit work won't be as profitable for us, and we found it would be more profitable for us to consult in corporate governance, internal audit and advising audit committees." (See related story, page 1.) - Grassi currently is recruiting a partner from a Big 4 firm to head the practice and expects it to generate $1.8 million to $2.4 million within the next year.