A federal district judge in Miami has rejected an attempt by Stifel Financial to vacate a $133 million arbitration award against the firm, AdvisorHub reported.
U.S. District Judge Darrin P. Gayles granted the plaintiff’s request to confirm the award from a Financial Industry Regulatory Authority panel. The three FINRA arbitrators made their decision in March 2025, siding with Stifel clients David Jannetti of Miami and his three children in a dispute over the risky structured note strategy of broker Chuck A. Roberts.
FINRA barred Roberts from the industry in July after the broker refused to appear for on-the-record testimony.
A Stifel spokesperson said it plans to appeal the decision. “Stifel maintains this was a runaway and unjust arbitration award that resulted from a biased arbitrator who prejudged the case and an unfair FINRA process,” the spokesperson said.
The ruling by Gayles comes after Magistrate Judge Eduardo I. Sanchez of the U.S. District Court for the Southern District of Florida recommended that Stifel’s motion to have the award vacated be denied.
The Jannettis alleged that they were misled into believing that Stifel was using low-risk structured notes in their investments. They accused the Missouri-based firm of breach of fiduciary duty, negligence, negligent supervision, fraud, breach of contract, and violation of the Florida Securities and Investor Protection Act. In ruling against Stifel, the FINRA arbitrators said that Stifel “had actual knowledge of the wrongfulness of the conduct and the high probability that injury or damage to [the Jannettis] would result and, despite that knowledge, intentionally pursued that course of conduct, resulting in damage.”
In its motion challenging the arbitrators’ decision, Stifel contended that one of the FINRA arbitrators, Stephanie Charny, was biased and refused to recuse herself from the case even though Stifel requested that she do so. The firm alleged that a previous FINRA arbitration ruling involving similar claims against Stifel and Roberts demonstrated Charny’s prejudice. In that case, $14.3 million was awarded to Louis and Elizabeth Deluca and their business, UBS Inc. They alleged that Stifel Financial failed to supervise the structured note strategy of Roberts, who recommended investments that resulted in losses.
But in his recommendation, Magistrate Judge Sanchez sided with the investors’ contention that Stifel waited too long to object to Charney, noting that they had selected her as an arbitrator in both cases and knew during the course of the prior case that there was a risk she could rule against it.
Stifel “was aware of that ‘known potential’ conflict well before,” but “sat idle” and waited to see whether the award was favorable in the October decision, Sanchez wrote, adding that “Only upon discovering that the award was unfavorable” in the prior case, the firm “raised an eleventh-hour challenge.”
Sanchez also determined that Stifel also did not establish that Charney had a bias, stating that an “adverse award in and of itself is no evidence of bias absent some evidence of improper motivation.”
Stifel’s “assessment of Charny’s bias and partiality, and hence her supposed lack of truthfulness, is based wholly on speculation, is unsupported by any evidence, and fails to establish that Charny exceeded her authority,” Sanchez added.
Gayles wrote that he agreed with the magistrate’s report and recommendation, which presented “well-reasoned analysis and conclusions.” His order also noted the substantial deference that courts give to arbitrators and the very narrow grounds that they have to intercede under federal law.
The full award was approved, and the judge granted the Jannettis’ motion for post-award interest.
The attorneys at Hyman Cotter have handled hundreds of arbitrations before FINRA, the Chicago Board Options Exchange, the Chicago Board of Trade, JAMS, the American Arbitration Association and other self-regulatory organizations nationwide. We have also appeared in courts throughout the United States in various securities-related matters. For more information about our arbitration and litigation services, please contact Hyman Cotter at (833) 665-0784 or through our online contact form.
