St. Louis Brokers Fined More Than $1 Million By FINRA

Two St. Louis brokers owned by Stifel Financial Corporation have been fined and forced to pay restitution for a combined total of more than $1 million by the Financial Industry Regulatory Authority.

While neither company admitted to or denied the charges, Stifel, Nicolaus & Company Inc. agreed to pay a fine of $450,000 and make restitution of nearly $340,000 to 59 customers. Century Securities Associates Inc. will pay a fine of $100,000 and make restitution of more than $136,000 to six customers. 

The restitution is in connection with sales of leveraged and inverse exchange-traded funds, according to a release. FINRA said that between January 2009 and June 2013, both companies made “unsuitable recommendations of non-traditional ETFs because some representatives did not fully understand the unique features and specific risks associated with leveraged and inverse ETFs.”

The firms failed to make sure that their representatives had formal training on products before recommending them to customers. Customers who bought and held non-traditional ETFs based on recommendations by the firms’ representatives experienced net losses.

FINRA also said that both companies did not have reasonable supervisory systems in place and that they did not create a system to address risk associated with longer-term holding periods.


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