Brokerage Firm Review: Stifel, Nicolaus & Company

Stifel, Nicolaus & Company, Inc. (“Stifel Financial Co.”) (CRD# 793) has many different complaints filed by FINRA (Financial Industry Regulatory Authority), state regulatory organizations, and investors such as yourself. At the Law Offices of Robert Wayne Pearce, we have investigated Stifel, Nicolaus & Company, its regulatory and customer complaints, and have also represented investors with claims of fraud, negligence, and breach of fiduciary duty against this organization and its financial advisors.

If you believe you have a claim against Stifel, Nicolaus & Company, you should strongly consider hiring an investment fraud lawyer. You should not wait until it’s too late to file a claim. The Law Offices of Robert Wayne Pearce, P.A. , offers free consultations. Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.

Can I Sue Stifel, Nicolaus & Company?

If you’ve lost money caused by Stifel, Nicolaus & Company and/or its employees’ misconduct then the answer is, YES, you can sue Stifel, Nicolaus & Company but the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding. Attorney Robert Wayne Pearce has over 40 years of personal experience in FINRA arbitration proceedings and knows very well how you can not only sue Stifel, Nicolaus & Company in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Stifel, Nicolaus & Company is to call Attorney Pearce at our office at 800-732-2889 .

Investment Losses? We Can Help

Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.

Get A Free Consultation

or, give us a ring at (800) 732-2889.

What is Stifel, Nicolaus & Company?

Stifel, Nicolaus & Company (CRD# 793) is an independent brokerage firm that operates within Stifel Financial. As an independent firm, Stifel, Nicolaus & Company is not affiliated with any specific bank or financial institution, which allows it to provide objective advice and services to its clients. Stifel Financial was first registered as a securities broker-dealer in 1900 with the SEC and FINRA.

As a registered broker-dealer, Stifel, Nicolaus & Company is subject to regulations and oversight by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). It is required to comply with industry standards and regulations to ensure the protection of its clients’ interests.

A failure to comply with industry standards by either its brokers or the firm itself can result in disciplinary actions, fines, or other penalties imposed by regulatory authorities.

Stifel, Nicolaus & Company Has Many Different Regulatory Problems 

Stifel, Nicolaus & Company’ rapid growth has not been without consequences. There have been approximately 137 state and self-regulatory body disclosure events; that is, final and formal proceedings initiated by a regulatory authority (e.g., a state or federal securities agency like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) for a violation(s) of investment-related rules or regulations. In addition, there have been hundreds of customer complaints filed against Stifel, Nicolaus & Company for misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record. 

We have reported and written about these regulatory problems and customer complaints over many years. Stifel, Nicolaus & Company is a repeat offender: there are over 138 FINRA-reported disciplinary proceedings citing the firm with one form of supervisory lapses or another.

A Brief Overview of Some of the Regulatory Problems Stifel, Nicolaus & Company Has Faced Over the Years*

Stifel, Nicolaus & Company has been repeatedly censured, warned, and fined multi-millions of dollars for its own misconduct and failure to supervise its army of financial advisors.* A few of the notable FINRA Sanctions for its Supervisory Failures are below:

When Synthetic CDOs Cost Wisconsin Schools, Stifel Settled for $24.6 Million

Brief overview: Stifel, Nicolaus & Co., along with its ex-Senior Vice President, David Noack, faced allegations of defrauding five Wisconsin school districts by selling them risky and complex investments funded with borrowed money. The investments in question were synthetic collateralized debt obligations (CDOs), which ultimately resulted in a complete loss for the school districts. Stifel and Noack settled with the Securities and Exchange Commission (SEC) in 2016, agreeing to forfeit $1.66 million, pay penalties, and provide compensation to fully compensate the school districts for their losses.

Variable Annuity, Reit Losses Lead to $1.3 Million Award

Brief overview: Stifel Nicolaus & Co. faced an arbitration award in 2015 for substantial losses incurred by investor Tracy Noble Gilbert due to investments in variable annuities and a real estate investment trust (REIT). The investor filed a complaint alleging breach of fiduciary duty and account churning. A FINRA panel ruled in favor of the investor, awarding her $1.3 million in damages.

Stifel Ordered to Pay $1.5 Million over Biotech, Healthcare Supervisory Failures

Brief overview: In 2019, FINRA held Stifel, Nicolaus & Co. liable for failing to supervise a broker’s sales of biotechnology and healthcare stocks to three clients. The clients alleged that the broker invested a significant portion of their portfolios in a small number of biotech stocks, resulting in substantial losses. The firm was ordered to pay the clients an award of $1.5 million.

Early UIT Rollovers Cost Stifel $1.9 Million

Brief overview: Stifel Nicolaus & Co. faced a FINRA sanction in 2020 due to supervisory failures related to early unit investment trust (UIT) rollovers. The firm’s brokers recommended unsuitable UIT rollovers for over 1,700 customers, resulting in excessive sales charges. Stifel’s supervisory system was found to be inadequately designed to detect unsuitable rollovers, leading to the firm’s failure to identify these transactions. As a result, the firm was ordered to pay $1.9 million in restitution to the affected customers.

Stifel, Nicolaus & Co., Inc. Penalized Over $3.6 Million by FINRA for Unit Investment Trust Violations

Brief Overview: FINRA has mandated Stifel, Nicolaus & Company, Incorporated to provide restitution amounting to around $1.9 million, inclusive of interest, to over 1,700 customers affected by premature rollovers of Unit Investment Trusts (UITs). Additionally, FINRA has imposed a fine of $1.75 million on the company for disseminating erroneous information concerning rollover expenses and for associated supervisory infractions.

Stifel, Nicolaus and Century Securities Ordered by FINRA to Pay Over $1 Million in Fines and Restitution for Inappropriate Sales of Leveraged and Inverse ETFs, and Associated Supervisory Failures

Brief Overview: The Financial Industry Regulatory Authority (FINRA) has directed two St. Louis-based broker-dealers, namely Stifel, Nicolaus & Company, Incorporated and Century Securities Associates, Inc., to collectively pay fines amounting to $550,000. Additionally, they have been ordered to provide restitution totaling almost $475,000 to 65 customers. These actions stem from their involvement in the sale of leveraged and inverse exchange-traded funds (ETFs). It is noteworthy that Stifel and Century are affiliated entities and are both subsidiaries of Stifel Financial Corporation.

Finra Imposes $750,000 Fine on Stifel, Nicolaus & Co. Inc. for Inadequate Customer Asset Accounting

Brief Overview: Stifel, Nicolaus & Co. Inc., a prominent St. Louis-based broker-dealer, has recently faced a fine of $750,000 from Finra due to insufficient tracking of customer assets held in a reserve fund and a proprietary trading account. Despite the permissible practice of utilizing customer assets as collateral for bank loans during the period of 1999-2012, Stifel failed to appropriately account for such utilization in a reserve fund specifically designated to safeguard this collateral. This disciplinary action was disclosed in a document signed on April 8 by the Department of Enforcement at the Financial Industry Regulatory Authority Inc.

Why Does Stifel, Nicolaus & Company Have So Many Regulatory Problems And Customer Complaints?

Independent broker-dealers are notorious for their lax supervisory practices and procedures. The business model of these franchise type operations is to open many offices nationwide for steady growth of fixed monthly revenues without the costs attendant to a full-service branch office with on-site manager, compliance officer and operation personnel. The registered representatives of these independent broker-dealers generally operate as separately incorporated businesses. They are not employees of the broker-dealer and therefore not controlled in the same manner as full-service brokerage firm representatives. The registered representatives control their structure and costs to maximize profits and often leave the protection of investors’ rights and interests as their lowest priority.

The typical supervisory organization of independent broker-dealer operations is to have other independent contractors operate Offices of Supervisory Jurisdiction (OSJs) to monitor the registered representatives from geographically remote offices and then report to the main franchisor’s compliance office at national headquarters. The supervisors at the OSJs are not employees of the franchisor and often run their own brokerage, insurance and other businesses. They are not devoted full-time supervisors of the smaller branch offices. Consequently, OSJ managers cannot and do not supervise the day-to-day operations of the registered representatives of these Independent broker-dealers. 

Generally, there is no immediate review of new accounts opened, securities transactions, business records, cash or securities receipts and deliveries, correspondence and business activities unrelated to the securities brokerage operation at these independent brokerage firms. The lax supervision leaves investors who have transferred their accounts to the smaller independent broker-dealer vulnerable to sales of securities that have not been reviewed or authorized by anyone other than the sales representative earning a commission. There may be no one onsite to detect forgeries of clients’ signatures on documents, the placement of inaccurate information about a client’s investment objectives and financial condition to document the suitability of a particular investment recommendation. Oftentimes there is no daily review of sales literature and client correspondence to protect against misrepresentations and misleading statements being made to investors. In fact, it is not unusual for there to be only one compliance audit visit per year at many of these offices.

These Independent brokerage business operations are worrisome to the North American Securities Administrators Association (NASAA), which has documented more instances of sales abuse and consequently investor losses at these firms than the traditional brokerage firms with branch offices with on-site managers and compliance personnel.

Did Stifel, Nicolaus & Company Advisor Misconduct Cause You Investment Losses?

When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the right to seek reimbursement from the responsible parties. Stifel, Nicolaus & Company is responsible like any employer for its financial advisors acts and omissions. In addition, it has an independent duty to supervise its stockbrokers and investment advisors. These cases can be extremely complex, and so having the support of a reputable attorney who is experienced in recovering investment losses for investors is key to your success. Many customers make the mistake of contacting Stifel, Nicolaus & Company without representation with an attorney about their complaints and have their complaints denied.

Related Read: Can You Sue Your Brokerage Firm?

Investment Losses? We Can Help

Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.

Get A Free Consultation

or, give us a ring at (800) 732-2889.

Consult With An Attorney Who Recovers Investment Losses Caused By Stifel, Nicolaus & Company Today!

The investment loss attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 40 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with Stifel, Nicolaus & Company cases, and Attorney Pearce is committed to seeing that those responsible for the losses you have suffered are held fully accountable.

Give us a call at 800-732-2889 . Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.

Robert Wayne Pearce

Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $170 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.

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