A week after leaving Stifel Financial Corp. under a cloud of investor complaints, star Miami broker Chuck Roberts was barred Wednesday from the securities industry, according to the Financial Industry Regulatory Authority (FINRA).
Roberts for the past two years has been at the center of investor complaints against his brokerage firm, Stifel Nicolaus & Co, where he worked since 2016.
Stifel has paid millions of dollars in damages to former clients of Roberts over the past year after investors’ won lawsuits filed against the firm in FINRA arbitration. According to Roberts' BrokerCheck report, Stifel is on the hook for more than $166 million in damages, legal fees and settlements in investor complaints involving Roberts.
The investor complaints stem from losses linked to Roberts’ structured note strategy, with clients claiming the strategy was not in their best interest or that Roberts had inaccurately described the products.
Roberts refused to appear to testify to FINRA, resulting in his being barred from the securities industry for failing to cooperate with the regulator. According to the FINRA order, he consented to FINRA’s findings without admission or denial.
Roberts initially cooperated with FINRA’s investigation by producing documents and appearing for on-the-record testimony, according to the order, but in June he told FINRA he would no longer testify in the matter.
His attorney, Susan Schroeder, did not return a phone call Thursday morning to comment. A spokesperson for Stifel declined to comment.
Jeff Erez, a plaintiff’s attorney representing a large portion of the Stifel clients suing the firm, told InvestmentNews on Thursday that FINRA should have started its inquiry into Roberts sales of structured products much earlier.
“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,” Erez said. “FINRA barred him for failure to cooperate, but its decision is not linked to the allegations in the investor complaints and his wrongful conduct.”
“It’s obvious that Mr. Roberts has harmed many investors and that, at a minimum, he will not be employed again at a broker-dealer,” Erez said.
The performance of structured notes is typically tied to an underlying asset, such as a specific stock or an index such as the S&P 500 stock index.
Most notably - and perhaps most damaging - to Roberts was an industry arbitration panel’s decision in March to award clients of Stifel and Roberts $132.5 million in damages and legal fees in a dispute adjudicated under the aegis of FINRA Dispute Resolution Services.
In that investor complaint, 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 damages to clients.
The size of the Jannetti award stunned the industry. The arbitrators ordered Stifel Nicolaus to pay Jannetti and family $26.5 million in compensatory damages, $79.5 million in punitive damages, and $26.5 million in attorney’s fees and costs. Awards of punitive damages are rare in FINRA arbitration cases.
Stifel in May in federal court in Miami filed a motion to vacate that award.
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