We are currently investigating claims of seniors concerning the investment recommendations of Stifel Nicolaus. Please contact us if you have questions concerning your losses.
On March 25, 2024, the Financial Industry Regulatory Authority (FINRA) fined Stifel $3 million for the inappropriate sale of complex, non-traditional exchange traded funds. This includes sales of leveraged ETFs, commonly designated with a “1.5x” or “2x”.
These non-traditional ETFs are inappropriate for all but the most sophisticated investors. The investments can lose money more rapidly than most other investments, are designed to be an intra-day hedge, and are inappropriate to hold for more than one day.
State and federal regulators are skeptical of these ETF investments and have warned against their use since at least 2010.
The charges and fine come in the wake of a prior regulatory action. The brokerage was previously fined in 2014 for allowing the recommendation of these highly speculative investments to moderate and conservative investors. The settlement of the prior regulatory action required the brokerage to supervise its brokers to prevent these types of sales violations.
As a result of supervisory failures after the 2014 settlement, FINRA stated, “the Stifel firms failed to detect or address hundreds of occasions during the relevant period in which the firms’ representatives recommended that customers buy and then hold [non-traditional ETF products] for potentially unsuitable periods”, and that “some of the affected [investors of the brokerage] were seniors, and many had conservative investment objectives or moderate risk tolerances.”
Stifel, Nicolaus & Co. was also recently ordered Monday, May 1, 2023, to pay $2.5 million by Massachusetts’ top securities regulator, William Galvin, for ignoring a former agent’s questionable trades that resulted in many of his clients — including older adults, nonprofits and a church — to be charged excessive and unauthorized fees.
Regulators also ordered the investment firm to pay more than $700,000 in restitution to affected customers, as part of a consent order the broker-dealer has entered with Galvin’s Securities Division.
Former Stifel broker-dealer agent Joseph Crespi “subjected many of his clients to predatory sales practices over several years, leading to higher commission sales for himself and his employer,” Galvin said Monday in a statement.
The regulator’s investigation further found “wide-ranging harm” to investors resulting from “multiple instances of [the brokerage’s] employees using personal cell phones to conduct business and distributing retail communications in violation of firm and regulatory requirements.”
From 2018 to 2022, Crespi was “Stifel’s sixth highest revenue-producing employee in New England as of June 30, 2019 (as considered year-to-date) and continued to be a top producing agent […] thereafter,” according to the regulator consent order.
“Despite repeated warnings by Crespi’s own branch manager,” Galvin’s office said, “Stifel failed for years to discipline Crespi or take any meaningful actions to correct his behavior.” The firm chose to ignore the harm Crespi was doing and could be argued that the ignorance was willful because of Crespi’s production for the firm.
We have helped investors recover losses caused by bad financial advisors for over 20 years. Please contact us for a consultation.
Recent Comments