Stifel is planning to ask a court to
A three-person Financial Industry Regulatory Authority panel hit Stifel on Thursday with a $14.3 million award over a complaint regarding a troubled broker's recommendations of complicated investment vehicles known as
The bulk of the order against Stifel consists of $9 million in punitive damages — an amount one industry expert called proportionally one of the largest such awards he's ever seen. Douglas Schulz, a securities expert and the president of Invest Securities Consulting, said it's rare for arbitration panels to provide punitive damages in the first place and doubly unusual for the amount to be so large.
"Clearly, the arbitration panel thought there was liability, and the wrongdoing was egregious," Schulz said.
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Stifel is preparing to dispute such contentions. A spokesperson for the firm said, "While we respect the FINRA arbitration process, we strongly disagree with this panel's decision and the way it conducted the hearing. This windfall award vastly exceeds any actual damages incurred by an extremely sophisticated client and is simply not supported by the facts of the case. We will be moving to vacate the award."
The claims
The claimants in the case were Louis and Elizabeth Deluca of Jupiter, Florida, along with their business UBS, Inc., which is unaffiliated with the Swiss banking giant. They had initially sought between $1 million and $5 million in compensatory damages, along with punitive damages and compensation for attorneys' fees and other costs.
As is common in arbitration cases, the panel overseeing this dispute did not go into its reasons for its decision. Along with $9 million in punitive damages, the arbitrators' final award also consisted of roughly $4 million in compensatory damages, $1.1 million in attorneys' fees and $100,000 for costs.
One of the claimants' lawyers, Stefan Apothekar of the Miami-based firm Erez Law, said that the $9 million damage award was a reflection of "how overwhelming the evidence was." Apothekar, who worked on the case with lead attorney Jeffrey Erez, said the dispute involved claims of overconcentrating his clients' portfolios in structured notes, failures of supervision and illegal "off-channel" communications.
Stifel was
"This was not a two-day hearing," he said. "It took 11 days and was very exhaustive. No stone was left unturned. Everything came out in the wash, and I think the panel got it right."
Troubled broker
The broker at the center of the case, Chuck Roberts, leads a practice at Stifel called the CR Wealth Management Group, which has sites in New York and Miami Beach, Florida. At least 19 customer complaints have been filed against him since late 2022, according to
Like the claims that led to Thursday's arbitration award, many of the cases accuse Roberts of violating his fiduciary duty to look out for clients' interests, as well as negligence, fraud and breach of contract. Roberts' attempt to have his
Attempts to reach Roberts at his office and by email were unsuccessful. Apothekar, whose firm
Roberts' BrokerCheck page says he has 34 years of industry experience. He came to Stifel in 2016 after stints at Morgan Stanley and its predecessor, Smith Barney, Oppenheimer, Paine Webber, Lehman Brothers and other firms.
Schulz said the $9 million in punitive damages is the kind of award that can be used to show firms that neglectful and possibly deceitful practices aren't tolerated. Arbitrators, he said, too often shy away from large penalties for fear that the industry will seek to bar them from serving on future panels.
"It's about time," Schulz said. "This has got to happen more often because it's the sort of thing that could help force the industry. For some firms, even a $9 million punitive damage doesn't register. But if you get more of these, they could add up to something."
