Stifel Financial Corp. on Friday lost an important round in its months-long fight to prevent paying clients of a former star broker $133 million in damages and legal fees stemming from an arbitration claim a family won last year after suing the firm.
A federal magistrate judge made a recommendation on Friday to a federal trial court judge in Miami to deny Stifel’s motion to vacate the $133 million award, the largest award in FINRA history in a retail customer arbitration.
Before the federal trial judge makes a final ruling, Stifel has until Feb. 20 to file any objections to the recommendations by the magistrate judge.
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.
“We disagree with the magistrate’s recommendation, which is just the first step of judicial review of a runaway arbitration award that resulted from a biased and unfair FINRA process,” a Stifel spokesperson said. “ We believe the award cannot be sustained for multiple reasons as clearly laid out in our filings.”
Jeff Erez, an attorney for the clients, David Jannetti and family, declined to comment.
A three-person arbitration panel overseen by FINRA Dispute Resolution Services last March 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.
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.
&Partners has also added a $357 million Texas family practice, while Janney recruits a $250 million Edward Jones advisor in Miami
Linda Patel will lead J.P. Morgan Advisors in Florida and Georgia as Bank of America adds nonprofit specialists in New York
Interval funds and other semi-liquid or illiquid products are typically two to three times more expensive than plain vanilla stock or bond mutual funds or exchange-traded funds.
The royalty statements looked normal - until someone checked the electronic files.
They allegedly fabricated SEC certificates to dupe investors.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
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
