Consent Order (Stifel, Nicolaus & Company, Inc., Respondent Case No. 25-20765)

State of Maine
Office of Securities
121 State House Station
Augusta, Maine 04333-0121

I. PRELIMINARY STATEMENT Pursuant to the authority granted to the Maine Securities Administrator ("Administrator") under the Maine Uniform Securities Act, 32 M.R.S. 16101 et seq. (the Act), and after investigation, careful review, and due consideration of the facts and statutory provisions set forth below, the Administrator hereby finds that there is good cause, and it is in the public interest to enter into this Consent Order (Order) with Stifel, Nicolaus & Company, Inc. (Stifel), which resolves any and all issues in controversy regarding the specific conduct described herein on the terms set forth in this Order. As the result of a coordinated investigation, the Administrator concluded that Stifel charged unreasonable commissions on certain low-principal equity transactions. Nationwide, Stifel charged unreasonable commissions on approximately 45,352 equity transactions over a five-year period from May 1, 2020 to April 30, 2025 (the Relevant Time Period), totaling $885,480.13. Stifel in full settlement of these matters neither admits nor denies the Statement of Facts as set forth in Section IV, and neither admits nor denies the Conclusions of Law set out in Section V. II. JURISDICTION 1. The Administrator has jurisdiction over matters relating to securities pursuant to the Act. 2. This Order is entered in accordance with 32 M.R.S. 16412. 3. The acts and practices that are the subject of this Order occurred while Stifel was licensed as a broker-dealer in Maine. III. RESPONDENT 4. Stifel is a broker-dealer licensed in Maine with a main address of 501 North Broadway, St. Louis, Missouri. Stifel is identified by Financial Industry Regulatory Authority (FINRA) CRD No. 793. IV. STATEMENT OF FACTS A. Stifel's Minimum Commission Practices for Certain Equity Transactions Failed to Ensure Transactions Were Executed at a Fair and Reasonable Price 5. During the Relevant Time Period, Stifel charged commissions to thousands of retail brokerage customers on equity transactions with low principal amounts. 6. During the Relevant Time Period, Stifel charged a minimum commission of $40 for certain equity buy and sell transactions (the Minimum Equity Commission) plus a $5.00 transaction fee applied to secondary transactions. 7. Stifels fee schedule notes that the maximum commission shall not exceed 5% of the principal unless the commission amount is less than $40.00.
8. Stifels policies and procedures noted that it should generally charge commissions less than 5% of the principal value of the transaction, taking into consideration the relevant circumstances, including market conditions, the expense involved in executing the order and the value of any service rendered. 9. Stifels policies and procedures permitted managers to adjust the commission amount to ensure commissions were fair and reasonable. 10. The Act prohibits Stifel from charging unreasonable commissions for services performed. 11. FINRA Rule 2121 Supplementary Material .01 (Rule 2121.01) sets a guideline of five percent for determining whether a commission is unfair or unreasonable. However, the 5% Policy is a guide, not a rule. A commission pattern of five percent or even less may be considered unfair or unreasonable. 12. During the Relevant Time Period, Stifel executed 105 equity transactions in Maine, which included an unreasonable commission for services performed (i.e., in excess of 5% of the principal trade amount), totaling $1,835.74. 13. Numerous equity transactions executed by Stifel included a commission well in excess of 5% of the principal value of the transaction. B. Stifel Did Not Reasonably Supervise Transactions that Applied the Minimum Equity Commission 14. Stifel did not reasonably supervise transactions that applied the Minimum Equity Commission charge to ensure that Stifel charged its customers a reasonable commission. 15. Stifels supervisory systems included an alert where the commission amount on an equity transaction exceeded 5%. 16. Stifels policies and procedures contemplated manual adjustment of commissions based on certain factors which would determine whether the commission was reasonable. 17. However, Stifels policies and procedures provided that a transaction which involves a small amount of money may warrant a higher percentage sales credit to cover the value of services rendered. 18. Stifels surveillance policies failed to reasonably detect and correct unreasonable commission charges. 19. As a result, Stifel failed to adequately supervise low-principal equity transactions where the Minimum Equity Commission was in excess of 5%. V. CONCLUSIONS OF LAW 20. The preceding paragraphs are incorporated by reference as though set forth verbatim herein. 21. Pursuant to 32 M.R.S. 16412(4)(I) and Maine Office of Securities Rule Chapter 504 7(1), it is a violation of the Act for a licensed broker-dealer firm to fail to establish and maintain a system to reasonably supervise its agents. 22. Stifels acts and practices, as described above, constitute a violation of 32 M.R.S. 16412(4)(I), as well as Maine Office of Securities Rule Chapter 504 7(1). VI. ORDER 23. On the basis of the Statement of Facts, Conclusions of Law, and Stifels consent to the entry of this Order, IT IS HEREBY ORDERED: A. Stifel shall permanently cease and desist from conduct in violation of 32 M.R.S. 16412(4)(I) and Maine Office of Securities Rule Chapter 504 7(1), as described herein; B. Stifel is censured by the Administrator; C. Stifel shall provide restitution to the affected Maine customers in an amount of no less than $1,835.74, representing the portion of the commissions on certain low-principal equity transactions that exceeded 5% of the principal trade amount during the Relevant Time Period, plus interest in the amount of 6% from the date of the transaction to May 21, 2025. Stifel agrees to provide restitution within sixty (60) days of execution of this Order; D. Restitution shall be in the form of a dollar credit to current customer accounts, or a check for all former customers or current customers who are entitled to restitution as a result of transactions involving an individual retirement account; E. Stifel shall provide a notice of restitution to customers on terms not unacceptable to Massachusetts, Montana, Missouri, Alabama, Washington, Texas, and Iowa (the Multi-State Group) (Notice Letter) for use by all participating jurisdictions. The Notice Letter shall be sent at least seven (7) days prior to the distribution of any restitution. Within forty-five (45) days of the mailing of the Notice Letter, Stifel shall provide the Administrator with a list of all Maine residents for whom Stifel receives a Notice Letter as returned to sender or otherwise undeliverable (Undeliverable Maine Residents). To the extent the Administrator has access to different address information, Stifel shall mail a second Notice Letter to each Undeliverable Maine Resident within thirty (30) days of the Administrator providing such different address; F. Within forty-five (45) days of the mailing of the Notice Letter, Stifel shall prepare, and submit to the Administrator, a report detailing the restitution paid pursuant to this Order, which shall include dates, amounts, and methods of the transfer of funds for all restitution payments; G. Stifel shall pay an administrative fine in the amount of $20,000 to the State of Maine within fifteen (15) days following the date of entry of this Order. Payment shall be: (1) made by United States postal money order, certified check, bank cashiers check, or bank money order; (2) made payable to Treasurer, State of Maine; (3) either mailed to the Maine Office of Securities, 121 State House Station, Augusta, Maine 04333-0121, or sent by electronic transfer per the Administrators instructions; and (4) submitted under cover letter or other documentation that identifies payment by Respondent and the docket number of the proceeding; H. Stifel shall not claim, assert, or apply for a tax deduction or tax credit with regard to any state, federal or local tax for any amounts that Stifel shall pay pursuant to this Order; I. Stifel shall not seek or accept, directly or indirectly, reimbursement or indemnification, including, but not limited to, any payments made pursuant to any insurance policy, with regard to any amount that Stifel shall pay pursuant to this Order; J. If Stifel is the subject of a voluntary or involuntary bankruptcy petition under Title 11 of the United States Code within three hundred sixty-five (365) days of the entry of this Order, Stifel shall provide written notice to the Administrator within five (5) days of the date of the petition; K. Any fine, penalty, and/or money that Stifel shall pay in accordance with this Order is intended by Stifel and the Administrator to be a contemporaneous exchange for new value given to Stifel pursuant to 11 U.S.C. 547(c)(1)(A) and is, in fact, a substantially contemporaneous exchange pursuant to 11 U.S.C. 547(c)(1)(B); L. Upon the entry of this order by the Administrator, if Stifel fails to materially comply with any of the terms set forth in this Order, the Administrator may declare this Order null and void in whole or in part; and M. For good cause shown, the Administrator may extend any of the procedural dates set forth above. Stifel shall make any requests for extensions of the procedural dates set forth above in writing to the Administrator. VII. WAIVER 24. Stifel hereby waives all rights to contest this Order, including, but not limited to, (A) the right to contest whether this Order is fair, reasonable, and/or in the public interest, (B) the right to contest this Orders findings of fact, and (C) the right to contest this Orders conclusions of law. Stifel further waives its right to a hearing and any other procedural rights provided by the Act and the Maine Administrative Procedure Act, 5 M.R.S. 8001 et seq. VIII. NO DISQUALIFICATION 25. This Order does not create any disqualification under the Act, or rules or regulations thereunder, including any disqualification from relying upon the licensing exemptions or safe harbor provisions to which Stifel may be subject. This Order is not intended to be a final order based upon violations of the Act that prohibit fraudulent, manipulative, or deceptive conduct. This Order is not intended to form the basis of any disqualifications under Section 3(a)(39) of the Securities Exchange Act of 1934; or Rules 504(b)(3) and 506(d)(1) of Regulation D, Rule 262(a) of Regulation A and Rule 503(a) of Regulation CF under the Securities Act of 1933. This Order is not intended to form the basis of disqualification under the FINRA rules prohibiting continuance in membership absent the filing of a MC-400A application or disqualification under SRO rules prohibiting continuance in membership. This Order is not intended to form a basis of a disqualification under 204(a)(2) of the Uniform Securities Act of 1956 or Section 412(d) of the Uniform Securities Act of 2002. Except in an action by the Administrator to enforce the obligations of this Order, any acts performed or documents executed in furtherance of this Order: (a) may not be deemed or used as an admission of, or evidence of, the validity of any alleged wrongdoing, liability, or lack of any wrongdoing or liability; or (b) may not be deemed or used as an admission of, or evidence of, any such alleged fault or omission of Stifel in any civil, criminal, arbitration, or administrative proceeding in any court, administrative agency, or tribunal. 26. This Order shall be binding upon Stifel and its successors and assigns, as well as to successors and assigns of relevant affiliates, with respect to all conduct subject to the provisions above and all future obligations, responsibilities, undertakings, commitments, limitations, restrictions, events, and conditions. 27. This Order and any dispute related thereto shall be construed and enforced in accordance with, and governed by, the laws of Maine without regard to any choice of law principles.