Stifel, Nicolaus & Company Fined $750,000
Stifel, Nicolaus & Company was fined $750,000 by the Financial Industry Regulatory Authority after allegations of failing to properly account for customers’ assets in a reserve fund and those held in a propriety trading account. The firm is also accused of using the assets as collateral for bank loans they obtained between 1999 and 2012 and not properly accounting for the use of the assets.
According to the signed Letter of Acceptance, Waiver, and Consent, the firm allegedly failed when calculating the necessary amount of money for its Proprietary Accounts of Introducing Brokers and Dealers (PAIB).
During a five-week period in 2012, Stifel would have required roughly $36 million had the substitution of customer securities not occurred. In another instance between March of 2013 and November 2013, the firm allegedly miscalculated the requirements for its PAIB, leading to what is called “hindsight deficiencies,” so named because the firm did not have enough money in the reserve deposit account.
Under federal law, broker-dealers that use assets of customers as collateral must properly maintain a reserve account for customers. This is supposed to make sure that investors will be paid should the firm have to undergo liquidation. Failure to have sufficient funds in the reserve deposit account is a significant regulatory violation.
If you have lost money while investing with Stifel, Nicolaus & Company, we encourage you to contact our securities fraud lawyers at Meyer Wilson. We offer free consultations and are happy to review your rights and options as an investor.