Kansas City Business News
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Stifel, Nicolaus & Company headquarters at One Financial Plaza in downtown St. Louis
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Missouri Secretary of State Files Civil Action Against Stifel, Nicolaus & Company
KANSAS CITY, (kansascityfrontpage.com), March 20, 2009 - Secretary of State Robin Carnahan, working with the Missouri Attorney General's Office, has filed a civil enforcement action against investment firm Stifel, Nicolaus & Company, Incorporated, for misleading their customers who bought auction rate securities. Over 1,200 investors were left holding $180 million in frozen securities they have not been able to access for over a year.
The action, filed March 12, alleges that Stifel, Nicolaus & Company and Stifel Financial Corporation, as well as certain individuals, violated the Missouri Securities Act and Missouri Merchandising Practices Act. Hundreds of Missourians bought investments that Stifel told them were safe, "same as cash" or "like a money market."
In a release, Carnahan stated, "Other financial institutions across the country did the right thing and made their investors whole, but Stifel has refused to guarantee that they will take care of their customers. Investors call my office every week and desperately need access to their savings. My office is taking action to ensure these investors are made whole as quickly as possible."
The North Carolina Secretary of State, Elaine Marshall, commented that this action will benefit investors all across the country. "Some time ago, our Securities Division determined that there are Stifel, Nicolaus & Company investors in North Carolina who continue to be adversely affected by the collapse of the ARS markets in February 2008," said Marshall. "We strongly support Secretary Carnahan's vigorous efforts to help Stifel's ARS investors in North Carolina, Missouri, and across the country, and we look forward to working with the Missouri Secretary of State's Securities Division to make all those investors financially whole."
When the auction rate market collapsed in February 2008, investors were left without access to their money. The action alleges that even though Stifel was aware that conditions surrounding the ARS market were deteriorating, Stifel neglected to inform its customers of the risk to their savings. After the auctions stopped, complaints began to pour into the Secretary of State's Office.
The lawsuit calls for Stifel to pay immediate restitution with interest to all auction rate securities purchasers; pay penalties; make payments to the state that will go toward investor education; and reimburse the state for its legal and investigative costs.
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