Stifel
,
Nicolaus & Company has agreed to pay $3.2 million in fines and restitution to resolve allegations brought by Massachusetts regulators that the firm ignored multiple warning signs that one of its brokers was charging clients, including older investors, unauthorized and excessive fees.
William Galvin, secretary of the commonwealth and the head of Massachusetts’ Securities Division, describes the matter as a failure on Stifel’s part to supervise its brokers and noted that the latest settlement is the third time in five years that Massachusetts has levied a fine on Stifel for alleged misconduct.
“As the size of this fine illustrates, I will not tolerate repeated rule-breaking by firms that enact toothless compliance and supervisory systems, while placing their own bottom line above investor protection,” Galvin says. “This firm failed its customers when it dragged its feet for years, avoiding taking meaningful action to protect their best interests.”
Stifel declined to comment on the matter. In a consent order, Stifel admits that the allegations about its supervision and Crespi’s conduct are factually correct, but the firm neither admits nor denies violating the law.
The broker in question, Joseph Crespi, a 40-year industry veteran, could not immediately be reached for comment. Crespi left Stifel in February 2022, according to the online database BrokerCheck. Around two months later, Crespi registered with
Financial Services but resigned in November 2022 “after notification that he was suspended pending an internal review of his conduct related to acting outside the scope of his duties,” according to his BrokerCheck record.
Advertisement – Scroll to Continue
Ameriprise declined to comment.
Stifel’s penalty includes a $2.5 million fine payable to the state and another $700,000 in restitution to be repaid to investors. Stifel’s previous two Massachusetts penalties, assessed in 2018 and 2021 and both involving allegations of lax supervision, totaled $400,000.
As Galvin’s office describes it, Crespi had been flagged as a problem broker by his own supervisor for “predatory sales practices over several years, leading to higher commission sales for himself and his employer,” while internal communications showed Stifel was “well aware” of Crespi’s actions.
Advertisement – Scroll to Continue
Crespi allegedly made numerous unauthorized trades in clients’ accounts, including at least one transaction executed on behalf of a deceased client. Despite warnings raised by the branch manager and Stifel’s own internal review systems, Crespi’s alleged misconduct continued for more than three years before he was terminated.
“Despite repeated warnings by Crespi’s own branch manager, Stifel failed for years to discipline Crespi or take any meaningful actions to correct his behavior,” Galvin’s office says.
Write to [email protected]
