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May 01, 2023 at 12:29 PM
Stifel, Nicolaus & Co. was ordered Monday to pay $2.5 million by Massachusetts’ top securities regulator, William Galvin, for ignoring a former Stifel broker-dealer agent’s questionable trades that resulted in many of his clients — including older adults, nonprofits and a church — to be charged excessive and unauthorized fees.
Secretary of State William Galvin also ordered Stifel to pay more than $700,000 in restitution to affected Massachusetts customers, as part of a consent order the broker-dealer has entered with Galvin’s Securities Division.
Former Stifel broker-dealer agent Joseph Crespi “subjected many of his clients to predatory sales practices over several years, leading to higher commission sales for himself and his employer,” Galvin said Monday in a statement.
The Division’s investigation also found “wide-ranging harm” to Massachusetts customers resulting from “multiple instances of Stifel employees using personal cell phones to conduct business and distributing retail communications in violation of firm and regulatory requirements,” Galvin’s office states.
The order notes that Stifel has been the subject of “several regulatory actions over the past five years concerning its failure to supervise employees or deficiencies with its internal controls,” paying more than $14 million in fines, civil penalties, disgorgement and restitution.
Crespi was registered with Stifel from 2018 to 2022. He was “Stifel’s sixth highest revenue-producing employee in New England as of June 30, 2019 (as considered year-to-date) and continued to be a top producing agent of Stifel thereafter,” according to the consent order.
A report from the firm’s compliance department in early 2020 found “elevated” levels of fees and commissions paid to Stifel on several accounts due to “the active trading strategy utilized in these accounts,” according to the order.
The report also found that these accounts underperformed both the market and those of other Stifel brokers, and that Crespi’s trades triggered an internal alert system more than those of any other employee in the same 12-month period.
