Stifel Ordered to Pay $132.5 Million in Damages to U.S. Family, Ruled FINRA

By Jonathan Stempel

() – A Financial Industry Regulatory Authority arbitration panel directed Stifel Financial to compensate a family with $132.5 million due to misleading them about the risks associated with intricate structured notes, leading to substantial financial losses as stated by their attorney.

On Wednesday, a panel consisting of three members granted $26.5 million in compensatory damages, $79.5 million in punitive damages, and $26.5 million for legal costs to David Jannetti from Miami Beach, Florida, along with his children Sarah, Adam, and Leah based in New York.

On Thursday, Stifel announced plans to appeal, describing the Jannettis as a "sophisticated clan of seasoned and assertive investors." According to them, these individuals were well aware of the potential risks, actively participated in selecting their investments, kept close tabs on their performance, and only voiced dissatisfaction once they incurred losses.

The Jannettis requested a Miami federal judge to validate the award, which was ruled against the Stifel, Nicolaus wealth management and investment banking division.

A prize of $132.5 million amounts to 19% of the profit generated by the parent company based in St. Louis for the year 2024.

During an interview, the lawyer for the Jannettis, Jeffrey Erez, stated that the case was about what are known as auto-callable contingent coupon notes.

He mentioned that the Stifel broker failed to comprehend the risks associated with the notes, which were tied to the performance of the SPDR S&P Biotech ETF along with individual stocks like DocuSign, Dynatrace, Palantir Technologies, and Twilio.

The Jannettis ultimately suffered losses of "an astounding sum" – approximately $16 million within three years – which constituted most of their investment, according to Erez. This significant financial downfall occurred because Stifel overly concentrated their funds into notes.

I'm thrilled," Erez stated about the award. "This sends a clear message to firms like Stifel and other broker-dealers: failure to adhere to industry and compliance regulations will result in consequences.

Stifel concluded 2024 with 2,229 financial advisors and $501 billion in assets under management.

(This story has been updated to correct the dollar amount to $16 million, not $60 million, in paragraph 8.)

(Reported by Jonathan Stempel in New York and Pritam Biswas in Bengaluru; Edited by Shilpi Majumdar and Matthew Lewis)