Last month, LPL Financial decided it was fed up with certain rivals poaching reps at firms affiliated with its new acquisition, NPH. Last August, LPL, the nation's largest independent B-D, announced it had bought four NPH firms from insurance company Jackson National. Many rivals sought to capitalize on the free-for-all set off by the acquisition and independent B-Ds, almost on a daily basis, were announcing new NPH recruits—some with great glee.

According to third-party recruiters, LPL evidently singled out three firms for retaliation—Securities America, Cetera Financial Group and Kestra—and instructed its internal recruiters to target more than 5,000 “high value” reps at these firms with very attractive terms and payouts.

It was little surprise that LPL went after Securities America. The Omaha firm was by far the most successful at luring away NPH reps who didn’t want to move to LPL. The reps that Securities America  recruited generated between $100 million and $125 million in annual fees and commissions, according to estimates. That translated into more than 11 percent of NPH’s total revenue, so LPL’s decision to strike back was understandable.

But in its retaliatory moves, LPL omitted several prominent firms. Conspicuously absent was Advisor Group, which had finished second in the LPL-NPH derby. Advisor Group managed to recruit NPH reps with between $50 million and $75 million in annual revenues.

Cetera Financial Group, which was targeted, finished close behind Advisor Group and walked away in third place with reps producing an estimated $35 million to $45 million a year.

This is where things get curious, to say the least. LPL and Advisor Group are considered to be the leading contenders to acquire Cetera, which announced last month it had retained Goldman Sachs to “explore strategic options.” Some private equity firms, many of which were spooked on the industry when the DOL rule looked like it would squeeze B-D margins, reportedly are suddenly showing renewed interest, so the situation remains fluid.

Of course, Cetera might not be sold or it could decide to sell or spin off one or two of the six B-Ds within its network, an option some investment bankers think is increasingly likely.

Despite losing hundreds of NPH reps to rivals, the acquisition is considered a huge victory for LPL’s new CEO, Dan Arnold, as evidenced by his company’s surging stock price. Arnold has indicated that LPL plans to continue to acquire independent B-Ds in what many view as a consolidating space.

For its part, Lightyear Capital’s CEO Don Marron now owns Advisor Group and once owned Cetera, which he sold to American Realty Capital’s Nick Schorsch in early 2014 for $1.1 billion. Schorsch, who became a billionaire for a few months, continued his debt-financed acquisition spree for another year before his empire crumbled in 2015, landing Cetera and many other related entities in bankruptcy.

Many Cetera reps have fond memories of Marron and his management team led by Valerie Brown, now executive chairman of Advisor Group. Not only did they enjoy stability, which they came to appreciate in Schorsch’s wake; some also received options and participated in the sale of the firm when Schorsch made his kamikaze acquisition. Marron and Brown, who was CEO of Cetera, probably know Cetera’s operations as well as anyone.

Sources estimate that if the Advisor Group were to acquire Cetera, it could knock out as much as $75 million in annual operating expenses. Giant LPL probably could eliminate $100 million or even $150 million, sources familiar with both firms’ operations say.

But if LPL were serious about acquiring Cetera, as many think, it’s hard to see why they would be targeting Cetera’s rep network. During the Schorsch-inflicted bankruptcy, LPL and other firms all circled the Cetera B-Ds. Many of their reps were understandably looking to jump ship. Under the leadership of first Larry Roth and then Robert Moore, however, Cetera managed to emerge from bankruptcy, a rare feat in the brokerage business.

More recently, some Cetera reps have voiced vociferous opposition to the possibility of an LPL acquisition.

But there is a larger question. Why would LPL be “expending so much time, energy and money to poach Cetera’s top advisors if it was really the front-runner to acquire the firm?” one recruiter asked. Cynics suggest LPL might want to scare other potential suitors away so it could buy Cetera at a bargain price. However, those who know LPL say it is far too disciplined an organization to engage in wild-man tactics.

Others wonder if this recruiting strategy inadvertently tips LPL’s hand and signals it would prefer to acquire the Advisor Group from Lightyear. There is no evidence the two parties have even talked, but the Advisor Group offers some attractive assets.

It has, for instance, a lean management team at the top level and a strong technology infrastructure to support an expanding advisory services operation. So, in a merger there would be much less overhead. LPL might need to pick up some management talent and badly needed back office support if it plans to continue to grow. When Advisor Group was owned by AIG in the early 2000 period, Mark Goldberg, then the CEO of its Royal Alliance unit, was credited with building an excellent platform for hybrid RIAs to use for its advisory operations.

Of course, there are other reasons that  Advisor Group might be a more attractive acquisition for LPL than Cetera. According to Financial Advisor’s April broker-dealer survey, Advisor Group’s four broker-dealers generate about $1.4 billion in revenues while Cetera generates $1.76 billion. But most Advisor Group firms have a stronger tilt toward advice and asset management, the high-growth parts of the business. Moreover, the original four Cetera firms that Marron sold to Schorsch are viewed as having higher-quality reps from a revenue-per-rep and a compliance standpoint than the ones Schorsch bought on his frenzied acquisition binge.

Then there’s the simple math. Were Advisor Group to merge with Cetera, the emerging entity would have just under $3.2 billion in sales, making it the third-largest player in the IBD space behind LPL and Ameriprise, whose $4.26 billion in revenues are only $20 million less than LPL’s $4.28 billion.

If LPL purchased Advisor Group, the combination would have $5.7 billion in revenue and would solidify LPL’s position as the nation’s largest independent. Of course, a Cetera acquisition by LPL would put it over $6 billion in revenues, though the assets might be somewhat less attractive.

However, as LPL discovered with the NPH transaction, any acquistion is likely to cause serious breakage. Some Advisor Group reps are fiercely loyal to their four different B-Ds, Royal Alliance, Sage Point Financial, FSC Securities and Woodbury Securities. Forcing them or reps from Cetera's six B-Ds, for that matter, all to move under the LPL umbrella will inevitably result in attrition. But from the way the stock market has reacted to the LPL-NPH deal, the costs are well worth it.

LPL, the biggest player in the game, has just sent strange signals to Cetera and the rest of the marketplace. At the very least, its decision to target “high-value” Cetera reps and not those at Advisor Group or some other rivals casts doubt on whether it is serious about acquiring the former firm, one investment banker says.

For Marron, the decision may be whether to go or whether to stay. At the moment, Lightyear Capital’s 83-year-old leader is sitting in the catbird’s seat. He has a highly successful track record and doesn’t have to do anything.

But Marron has been doing deals on Wall Street since the 1960s and he's proven he can play his hand as well as anyone. He was once considered a boy wonder on Wall Street; he started his own brokerage firm at 25 and then became president of Mitchell Hutchins at 33. Later he merged Mitchell Hutchins with PaineWebber, which he ran for decades. As a firm known for its equity research, sales and trading skills, PaineWebber was viewed as one of the few large Wall Street firms where research possessed a high degree of integrity because it was not subordinated to the higher margin investment banking business.

If Marron buys Cetera, the combined entity would have about 12,000 reps and become a major rival to LPL. Some think that outcome is precisely the one LPL wants to avoid.

Were Marron to make a deal with LPL, he would be a legend in the private equity business and the “go-to guy” for potential investors and top talent in the IBD world. He reportedly negotiated the deal to sell Cetera to the hard-charging Schorsch in less than a month.

As for LPL, its desire is to warn other B-Ds that recruiting its reps is fair game, but “spiking the football and dancing in the end zone is another matter,” as one recruiter says. That may explain why it singled out Kestra, he adds.

Fair or not, LPL executives apparently perceived Kestra as one of a handful of midsize firms that was aggresively public about recruiting NPH reps. Given that it is owned by a cost-conscious private equity firm, recruiters think it might have set an example for LPL to scare numerous other midsize firms.

But the bigger question is how the Cetera saga plays out and whether it could turn into a game of 3D chess.