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Stifel Nicolaus to Pay $1.5M For Failure to Supervise Broker Kenneth Blumberg

Four Stifel, Nicolaus & Co. (SF) clients were awarded $1.5M in compensatory damages in their Financial Industry Regulatory Authority (FINRA) arbitration case against the brokerage firm. According to AdvisorHub, the claimants are accusing the broker-dealer of not properly supervising Stifel Nicolaus broker Kenneth D. Blumberg, who they contend invested up to 80% of their portfolio in biotech stocks.

The claimants also said that Blumberg mismarked trades and encouraged them to add more positions even as they were losing money. They are alleging the following:

  • Breach of fiduciary duty
  • Overconcentration
  • Breach of contract
  • Misrepresentations
  • Omissions
  • Broker fraud

Their inadequate supervision claim against Stifel notes that the  firm should have red flagged the type of investment strategy that Blumberg was using for his clients.

The claimants were initially part of a bigger $38M arbitration claim involving Stifel Nicolaus subsidiary Stifel Financial,  several other clients, and other firm brokers. However, that is now a separate investor case in which those other customers are now seeking at least $20M.

With 32 years in the industry, Blumberg remains with Stifel Nicolaus and has been one of its brokers for 12 years. Previous to that he was a registered broker with Ryan Beck, Citigroup (C), and Lehman Brothers.

If you or someone you love lost money while Kenneth D. Blumberg was your Stifel broker, contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) today. Our broker fraud lawyers can help you explore your legal options.

Stifel Settles SEC Case for $2.7M
It was just last month that Stifel, Nicolaus, & Co. agreed to pay $2.7M to settle US Securities and Exchange Commission (SEC) charges accusing the broker-dealer of not providing accurate and complete securities trading information, also known as “blue sheet data.” It is mandatary that broker-dealers provide the regulator with this information to help with enforcement and regulatory matters.

The SEC that such deficiencies by Stifel went on for several years and was mostly because of coding mistakes that were undetected. In total, the Commission noted 9.8 million transactions in which the brokerage firm didn’t report data and about 1.4 million transactions in which Stifel gave over information that was inaccurate.

Brokerage Firm Misconduct
At SSEK Law Firm, our broker-dealer misconduct and negligence attorneys represent investors throughout the US. Contact us today to schedule your free, no obligation consultation.

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