State of Mass. Fines Stifel Nicolaus & Co $300K

Stifel Nicolaus & Co to pay $300,000  for  Alleged Scheme

According to reports, Massachusetts’ regulators led by Secretarty of State William Galvin, has gone after the broker-dealer Stifel, Nicolaus & Co.  and an investment advisor with whom the firm had a deal to handle all his clients’ trading.

Francis Weller Jr. of Orleans, Mass., and his firm, Weller Asset Management, allegedly had an arrangement with Stifel, Nicolaus & Co. and one of its representatives, according to a complaint filed by the office of Massachusetts and Galvin.

Weller allegedly required all of his advisory clients to open trading accounts with Stifel, and the firm’s local representative received full-service commissions for his stock recommendations. Clients were also assessed management fees by Weller, according to the complaint.

Weller’s clients purportedly had to have their trading accounts with Stifel while Weller was able to use the company’s resources in exchange, the complaint says.

According to the complaint, Stifel’s representative was able to collect full-service commissions on his stock picks, while Weller also allegedly charged his clients a management fee.

Weller also allegedly violated state regulations by failing to disclose the arrangement to his clients, the complaint alleges, according to the publication.

From 2012 to 2017, Weller’s clients ended up paying more than $1 million in commissions to Stifel and its representative and hundreds of thousands of dollars to Weller in advisory fees, according to the complaint cited by ThinkAdvisor.

Stifel, Nicolaus & Co. has agreed to pay a $300,000 fine, to cease and desist from the alleged violations, to bring on an outside consultant to analyze trading connected to Weller, and to “make good” on any trades determined to have been unsuitable, according to reports..

Galvin’s office is seeking a cease and desist order against Weller, disgorgement of allegedly ill-gotten gains, an administrative fine and revocation of his registration to practice in the state, according to the publication.

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