Stifel plans to appeal a federal judge's decision this week to uphold a record nearly $133 million arbitration award it was hit with last year over the investment recommendations of a former broker.
Judge Darrin Gayles of the U.S. District Court for the Southern District of Florida on Tuesday issued an order confirming the $132.5 million award, which a Financial Industry Regulatory Authority arbitration panel had awarded to four investors — David, Sarah Lyn, Adam and Leah Jannetti — after finding a Stifel broker had placed them in risky and unsuitable investments. The penalty, the largest handed down to retail investors in a FINRA arbitration case, provoked an immediate outcry from Stifel.
On Wednesday, a spokesperson for the firm said Stifel isn't ready to give up the fight.
"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," according to the spokesperson. "We believe the award should not and cannot be upheld, and we plan to file a Notice of Appeal."
Arbitration awards are notoriously difficult to get overturned, and Stifel's attempt to vacate its $132.5 million penalty was always going to be a longshot. It filed a
For Stifel, a legal tab at $200M and likely rising
Roberts, who had run the Stifel-affiliated practice CR Wealth Management Group in Miami and New York, has been the subject of roughly 40 customer complaints mostly related to his recommendations of complex investment vehicles known as structured notes. Structured notes are a type of debt security that can offer high returns but also carry substantial risks and fees. Including the $132.5 million handed down in the Jannetti case, Stifel's tab for arbitration awards and settlements stemming from Roberts' recommendations is
Stifel's challenge to that landmark arbitration award centered on a FINRA arbitrator, Stephanie Charny, who had served on a separate panel in an earlier case against Roberts. The arbitrators in that instance handed down a
Stifel contended Charny's participation in that earlier ruling made her biased against Stifel by the time she was called on for the Jannetti case. Last month, Magistrate Judge Eduardo Sanchez rejected Stifel's arguments and recommended the federal court in Florida uphold the $132.5 million arbitration award.
The bulk of that — $79.5 million — consisted of punitive damages. These are often meant to punish conduct that's deemed grossly malicious or negligent and to deter defendants and others from committing the same violations again. Stifel contended the large punitive award in the Jannetti case was granted for unsound legal reasons. Judge Sanchez also rejected that argument.
FINRA
