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Regulation and Compliance > Federal Regulation > FINRA

FINRA Orders Stifel to Pay $500K in Customer Dispute

By Jeff Berman

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FINRA building in New York. (Photo: Ron Pechtimaldjian) Outside FINRA building in New York. (Photo: Ronald Pechtimaldjian/ALM)

A Financial Industry Regulatory Authority panel ordered Stifel to pay $500,000 in compensatory damages to a customer who had claimed one of the firm’s representatives “mishandled” her account “through unsuitable, unauthorized, and excessive trading.”

Stifel declined to comment on Wednesday, one day after FINRA made the decision by the FINRA panel’s three arbitrators available on its website.

The panel ruled that the firm and rep John Raymond Lisowski, who were both named as respondents in claimant Rosemary Lanzo’s action, were “jointly and severally liable” in the case. Lisowski has been a FINRA-registered broker at Stifel since 2007, according to his profile on FINRA’s BrokerCheck website.

Lanzo had requested compensatory damages of “at least $390,000” in her statement of claim. However, her request for “treble damages” of at least $1.17 million and/or punitive damages and attorneys’ fees were denied by the panel.

The statement of claim was filed with FINRA in December 2018, according to Michael J. Betts, the attorney who represented Lanzo in the case. However, he said he was “not authorized to comment on the award.”

Lanzo had asserted multiple causes of action in her statement of claim, including: Unsuitability, churning, violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, violations of the Pennsylvania Securities Act, breach of fiduciary duty, common law fraud, suitability, negligence, breach of contract, breach of the duty of good faith and fair dealing, failure to supervise, respondeat superior (the doctrine making an employer liable for the actions of an employee if those actions were committed within the scope of employment) and vicarious liability.

The causes of action related specifically to the claimant’s allegation that Lisowski, while employed as a financial advisor by Stifel, mishandled her account by failing to recommend and implement a suitable investment strategy or appropriate asset allocation, including over-concentrating her account in General Electric, Range Resources and U.S. Steel Corporation securities.

Lanzo further alleged that Lisowski placed unauthorized option trades, engaged in excessive trading and invested her funds in unsuitable securities, including Barrick Gold, Cliff’s Natural Resources, General Cable Corporation, MannKind and ProShares UltraShort 20+ Year Treasure, causing her to incur substantial damages.

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Jeff Berman

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