For the second consecutive year, Purshe Kaplan Sterling Investments Inc. has paid a multi-million-dollar arbitration settlement with a client.
The broker-dealer, a boutique that focuses on helping brokers leaving Wall Street to set up their own registered investment advisers, paid $1.5 million earlier this year to the pension plan of the St. Jude Heritage Medical Group in California, according to a filing with the Securities and Exchange Commission.
This comes on the heels of another costly settlement in 2019, when the firm paid $9.5 million related to the sale of alternative investments to a Native American tribe in Michigan. In 2017, Purshe Kaplan reached a settlement with the Financial Industry Regulatory Authority Inc. in which it agreed to pay $3.4 million in restitution to the tribe as well as another $750,000 for failing to supervise a broker who made the alternative investment sales between 2011 and 2015.
"Purshe Kaplan Sterling takes its regulatory responsibilities seriously and is engaged in the continual process of updating and strengthening its procedures," its CEO, Peter Purcell, wrote in an email to InvestmentNews. "Arbitration settlements are not necessarily reflective of compliance lapses but are based often on a combination of factors other than compliance."
The firm's insurance company paid $950,000 of the settlements and its owner, Wentworth Management Services, paid the rest, according to the firm's 2019 Focus report, which was filed with the SEC earlier this year but appeared online only recently.
"The primary focus of St. Jude was an outside business activity of [James M. Casey], the adviser, that was not disclosed to Purshe Kaplan Sterling as required under Finra rules and wasn’t a result of a compliance lapse at the firm," he wrote.
Casey committed suicide in Palm Springs in 2017, according to a local news report. He was president of Integrated Wealth Management, an RIA with more than $1 billion in assets at the time. St. Jude Heritage Medical Group had sued Integrated Wealth and Casey earlier for fraudulent transfers of assets inside the pension plan that generated commissions.
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"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.
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