Stifel Financial Corp.’s broker-dealer arm is quietly settling a series of customer complaints involving star broker Chuck Roberts while simultaneously working in federal court to overturn the stunning $133 million customer complaint it lost in March.
According to Roberts’ BrokerCheck profile, Stifel Nicolaus & Co., the broker-dealer arm of the holding company, settled one investor claim related to Roberts in February for $205,000, another in March for $2 million, and one more in April for $16 million.
The products clients purchased included structured notes and hedge funds, according to the BrokerCheck report. Clients' allegations against the firm included breach of fiduciary duty, negligence, and fraud.
Meanwhile, in federal court in Miami on May 16, Stifel Nicolaus filed its motion to vacate the $133 million arbitration award.
In its filing, the firm said the FINRA award, a majority of which consisted of punitive damages and attorneys’ fees, was “a shocking, runaway award in a FINRA arbitration that was infected with fundamental prejudice by a panel member who had already pre-determined that Stifel had acted improperly and lied about her ability to be impartial when she refused to step aside.”
“The result was the largest award in FINRA history in a retail customer arbitration,” according to the filing.
FINRA arbitration panels awarding large amounts of punitive damages is uncommon.
A spokesperson for Stifel declined to comment about any potential settlements with customers.
InvestmentNews reported almost two years ago that Roberts, a veteran financial advisor with Stifel Nicolaus, faced a rash of investor complaints stemming from the sale of potentially volatile structured notes, the performance of which is typically tied to an underlying asset, such as a specific stock or an index like the S&P 500 stock index.
Stifel began losing investor complaints in 2024, as investors won multi-million awards in the securities industry private legal forum, FINRA Dispute Resolution Services. Then, this winter, it lost the giant claim to David Jannetti and family members, who in 2023 sued Stifel Nicolaus.
The competing legal strategies, recently settling investors claims behind closed doors and duking it out in court over the Jannetti decision, appear contrary to Stifel’s public statements about defending Roberts’ structured notes’ strategy.
Wall Street banks underwrite structured notes, which can be volatile because they're a hybrid of a bond and a derivative. Some notes have principal protection but others don’t, and investors can lose a portion or all their principal based on the terms of the note and market volatility.
In the past, Stifel has said it would move to or attempt to vacate the awards in federal court, with judges in that venue reluctant to overturn private arbitration decisions.
Jeff Erez, a plaintiff’s attorney representing many of the customers suing Stifel, including the Jannetti family, declined to comment about any ongoing or past legal claims.
“Our firm has filed additional cases [involving Roberts] and we believe there are additional investors out there,” Erez said.
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