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Fines against Stifel Nicolaus

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Stifel Nicolaus was fined $500,000 for wilful violations of the Federal securities laws in Stifel underwriting of certain municipal securities offering. Stifel failed to conduct an adequate due diligence in certain offerings, and had no reasonable basis for believing the truthfulness of certain material representations in official statements made in those offerings. This made the offering and selling of the municipal securities bonds on the basis of materially misleading disclosure documents. (June, 2015 3-16638)

Stifel Nicholas was fined $450,000 for ETF (Exchange Traded Funds) that were recommended by the Stifel Nicholas stockbrokers without a full basis for the recommendation. Stifel Nicolaus sold about $641 million of nontraditional ETFs. For over four years, Stifel failed to establish and maintain a supervisory system that was reasonably designed to ensure that their sales of EFTs complied with all the applicable securities laws and regulations. Stifel stockbrokers had not completed any ETF product specific training, before recommending the ETFs to customers. This was inadequate supervision. (January 2014 2012034576902).

Stifel Nicholas was ordered to pay $1,100,000 to customers in Missouri who were improperly sold unregistered securities by a Missouri stockbroker of Stifel Nicholas. The Stifel stockbroker failed to disclose material facts, made material misstatements and engaged in a course of business that operated as a fraud or deceit. The stockbroker was Kenneth Neely, who was a Stifel stockbroker from October 2002 through January 2007. Neely made fraudulent misrepresentations to customers to induce them to invest in a REIT (Real Estate Investment Trust) and an investment club. Neely represented that the investment club would pay 20% per year. (January 2012 AP-12-01).

Stifel Nicholas was fined $80,000 for violating regulatory rules, for failing to trade customer orders timely and at the best prices. Stifel Nicholas failed to get the best prices for the customer trades. (December 2013 2010021747801).

Stifel Nicholas was fined $92,500 for failing to get customers the best prices on bonds that it was buying and selling for customers of Stifel. Stifel bought or sold corporate bonds from its customers and filed to buy or sell as a price that was fair. This led to excessive profits for the firm. (August 2013 2009017059501).

Stifel Nicholas, through an associated firm, Ryan Beck & Company, was fined $100,000 for failing to get the best prices for customers, failing to get breakpoints on sales of unit investment trusts, and overcharging customers because of these failures. A brokerage firm has a duty to know when product sales may have decreased commissions or charges based on volume purchases. By knowing this information, a brokerage can help a customer decrease their costs. But if a stockbroker does not know this information, or fails to apply it, the customer loses out. (September 2010 2008015700901).

Stifel Nicholas was fined $350,000 for failing to supervise a stockbroker who was on heightened supervision, and missed certain “red flags” that would have helped to protect customers. This stockbroker had three prior complaints regarding variable annuities. Stifel Nicholas was also required to pay more than $250,000 to customers of the firm. (March, 2012 2009020149801).

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