Stifel Nicolaus & Company Ordered to Pay $3.6 Million Regarding UIT Sales
Have you lost money investing in Unit Investment Trusts (UITs) with Stifel Nicolaus & Company? Stifel Nicolaus, which is a St. Louis, Missouri-based brokerage firm, was under an investigation by FINRA, the Financial Industry Regulatory Authority. FINRA alleged that Stifel failed to adequately supervise the sales and switching of Unit Investment Trusts.
UITs are not designed for short-term trading because of their commissions and costs of trading. Between January 2012 to December 2016, Stifel representatives recommended on hundreds of occasions that their customers sell their UITs and then purchase new, different UITs. FINRA alleged this to be unsuitable in view of the frequency and costs of trading, which can be as high as 3.95%. FINRA alleged that these switches cost customers over $1.89 million in charges that they would not have incurred if the UITs were held to maturity. To settle these allegations, Stifel was ordered to disgorge the $1.89 million in extra fees and also had to pay a fine of $1.75 million on top.
Brokerage firms like Stifel Nicolaus have a responsibility to adequately supervise all representatives who are registered through their firm. Brokerage firms also must take steps to ensure that their financial advisors follow all securities rules and regulations, as well as internal firm policies. When brokerage firms fail to adequately supervise their registered representatives, they may be liable for investment losses sustained by customers.
Israels & Neuman PLC is a securities and investment fraud law firm with offices in Denver, Colorado; Ann Arbor, Michigan; Seattle, Washington; and Phoenix Arizona. We represent investors in FINRA arbitration in all 50 states. Our attorneys have represented over one thousand investors against many firm, including against Stifel Nicolaus.