For the second time in the past month, arbitrators have ordered Stifel Financial to pay damages to an investor in cases that involved the strategy of one of its brokers.
According to an AdvisorHub report, a Financial Industry Regulatory Authority panel ordered that Stifel pay Douglas Muhlbauer, his insurance business and related accounts almost $1.9 million in compensatory damages plus interest and $470,000 in attorneys’ fees. This includes out-of-pocket costs of more than $891,000 and $987,000 for both the investment strategy and Muhlbauer’s managed accounts, respectively
The decision comes on the heels of an award in October in which Stifel was ordered to pay $14.3 million in a similar claim filed by Louis and Elizabeth Deluca and their business, UBS Inc. The sum included $9 million in punitive damages.
Both cases involve the structured note strategy of Miami-based broker Chuck Roberts, who recommended investments that resulted in losses and whose BrokerCheck record lists at least 16 claims seeking more than $41.2 million in damages.
In the most recent case, Muhlbauer asserted the following causes of action: breach of fiduciary duty; negligence; negligent supervision; fraud; breach of contract; violation of the Florida Securities and Investor Protection Act; and violation of ERISA
“I think the panel looked at the evidence and made the right decision,” Muhlbauer’s lawyer, Jeff Erez in Miami told AdvisorHub. “We think it’s a good outcome and justice has been served.”
In the first case brought by the Delucas, the complaint against Stifel alleged that Roberts recommended auto-callable contingent structured notes that offered minimal downside protection against sharp declines in the price of underlying reference assets.
Stifel has denied the allegations made by the investors and plans to appeal the first award but has not said whether it intends to appeal the second.
The arbitrators denied Stifel’s request to expunge the matter from Roberts’ public record in the Deluca complaint, and the firm withdrew its bid to have the Muhlbauer matter expunged.
The attorneys at Lewitas Hyman 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 Lewitas Hyman at (888) 655-6002 or through our online contact form.
