Bloomberg News

Stifel Financial Fined Over Inverse and Leveraged ETF Sales (1)

January 09, 2014

Two Stifel Financial Corp. (SF:US) brokerages were ordered to pay more than $1 million to resolve regulatory claims that they improperly sold inverse and leveraged exchange-traded funds to clients with conservative investment objectives.

Stifel Nicolaus & Co. and Century Securities Associates recommended the ETFs to retail customers even though brokers didn’t fully understand their features, the Financial Industry Regulatory Authority, the brokerage industry’s self-regulator, said in a statement today.

“The complexity of leveraged and inverse exchange-traded products makes it essential for securities firms and their representatives to understand these products before recommending them to their customers,” Brad Bennett, Finra’s enforcement chief, said.

Stifel Nicolaus agreed to pay a fine of $450,000 and restitution of about $340,000 to 59 customers. Century, which consented to a fine of $100,000, will also return $136,000 to six customers, Finra said. Both broker-dealers, which neither admitted nor denied the allegations, are owned by St. Louis-based Stifel Financial.

“Stifel and Century are pleased to have resolved this matter,” Tim Beecher, a spokesman for the brokerages, said in a statement. “We will continue to serve our clients consistent with their investment goals.”

To contact the reporter on this story: David McLaughlin in Washington at dmclaughlin9@bloomberg.net

To contact the editor responsible for this story: Sara Forden at sforden@bloomberg.net


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Companies Mentioned

  • SF
    (Stifel Financial Corp)
    • $48.81 USD
    • -0.61
    • -1.25%
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