Stifel has been ordered to pay $132.5 million in an arbitration case involving allegations of breach of fiduciary duty, negligence, and fraud related to a broker’s structured-notes strategy.
This decision, made by a three-person arbitration panel convened by the Financial Industry Regulatory Authority (Finra), marks the second-largest award in Finra arbitration history and the largest granted to retail investors.
The case centers around Stifel broker Chuck Roberts, a 34-year industry veteran. Although Roberts is not named as a respondent, his investment strategies are at the heart of the complaints. The claims allege that he overconcentrated clients’ holdings in structured notes, leading to more than a dozen investor complaints.
Stifel expressed disappointment with the decision, stating that it plans to seek judicial review of the award, which it believes is not supported by the facts or the law. The firm argues that the claimants were sophisticated investors who understood the risks involved and only complained after incurring losses.
Jeffrey Erez, a lawyer for the plaintiffs, remains confident despite Stifel’s plans to challenge the award. He noted that Stifel previously threatened to seek judicial review of a smaller award but ultimately paid it without pursuing further action.
Erez’s firm has handled most of the cases involving Stifel and Roberts, with 16 more cases pending. The first of these is set to begin arbitration proceedings next week.
The $132.5 million award includes compensatory and punitive damages, as well as $25.5 million in lawyer fees and costs. The claimants are David Jannetti and his children.
In their decision, the arbitrators described Stifel’s conduct as “egregious,” stating that the firm failed to adequately supervise Roberts, allowing him to pursue investment strategies that disregarded clients’ interests and prioritized the firm’s interests instead. The arbitrators noted that Stifel was aware of the potential harm but continued with the conduct, resulting in damage to the claimants.
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