Stifel Financial Corp. on Tuesday was denied its motion to vacate an $133 million arbitration claim it lost last year to clients, closing the firm’s efforts to not pay damages and legal fees for an industry arbitration award it deemed unfair.
U.S. district judge Darrin P. Gayles in Miami denied Stifel’s motion to vacate, which it filed last year, as well as granting the clients’ petition to confirm the arbitration award.
This was a likely outcome for Stifel.
A federal magistrate judge in February made the recommendation to Gayles to deny Stifel’s motion to vacate the $133 million award, the largest award in FINRA history in a retail customer arbitration.
It is common wisdom in the retail brokerage industry that federal judges rarely, if ever, throw out or adjust decisions made by arbitrators in such disputes.
“Stifel maintains this was a runaway and unjust arbitration award that resulted from a biased arbitrator who prejudged the case and an unfair FINRA process,” a Stifel spokesperson said. “We believe the award should not and cannot be upheld, and we plan to file a Notice of Appeal.”
Jeff Erez, the attorney for the clients in the 2025 arbitration, David Jannetti and family, declined to comment.
A three-person arbitration panel overseen by FINRA Dispute Resolution Services a year ago stunned the financial advice industry when it awarded clients of Stifel $133 million in damages and legal fees in a dispute centered on a former star Stifel broker in Miami, Chuck Roberts.
David Jannetti and family members in 2023 sued Stifel Nicolaus & Co., the broker-dealer subsidiary of Stifel Financial, claiming at least $5 million in damages related to investments in structured notes, a strategy that has resulted in several previous significant arbitration claims and tens of millions of dollars in damages to clients.
Stifel in May in federal court in Miami filed a motion to vacate the $133 million arbitration award to the Jannetti family.
The firm at the time 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 arbitration panelist Stifel questioned was Stephanie Charny.
The firm’s objections did not hold water with the magistrate judge, Eduardo I. Sanchez.
Stifel’s “assessment of Charny’s bias and partiality, and hence her supposed lack of truthfulness, is based wholly on speculation, is unsupported by any evidence, and fails to establish that Charny exceeded her authority,” according to Sanchez’s recommendation from February.
Stifel has paid millions of dollars of damages to former clients of Roberts over the past year. Roberts was barred in July from the securities industry by FINRA.
U.S. seniors lose $28.3 billion annually as a result of financial exploitation, according to a 2023 AARP study.
Cornerstone Capital and Echo Wealth Management add about $1.7 billion as RIA M&A heads for a record year.
As Robinhood and Schwab roll out AI agents and assistants, a new survey finds advisors still edge out chatbots in terms of client trust.
See which platforms and providers earned 5-Star recognition this year
Meanwhile, a multigenerational Cambridge team has hopped to LPL in Michigan, and Cetera's run of Commonwealth recruitment continues in New Jersey.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
