Stifel Loses Raiding Case, Ordered to Pay Over $7 Million in Legal Fees

Posted on March 20th, 2025 at 3:59 PM
Stifel Loses Raiding Case, Ordered to Pay Over $7 Million in Legal Fees

From the desk of Jim Eccleston at Eccleston Law

Stifel Financial has lost its raiding and breach-of-contract claim against a group of advisors who left its Indianapolis office to establish their firm. Instead, a FINRA arbitration panel has ordered Stifel to pay more than $7 million in legal fees to the advisors, according to AdvisorHub.

Stifel alleged that the advisors orchestrated a coordinated "raid" on its Indianapolis branch before launching their registered investment advisory firm, Sapient Capital, in early 2023. However, a FINRA arbitration panel consisting of two public and one non-public arbitrator rejected Stifel’s claims and found the firm liable under Indiana law for bringing the case in "bad faith" or continuing litigation despite it being “frivolous, unreasonable, or groundless.”

Sapient argued that Stifel pursued the case to appease its top leadership, specifically referencing Stifel CEO Ron Kruszewski.

The advisors claimed Stifel acted against its financial interests by prolonging the litigation and accused the firm of improperly obstructing clients from transferring their accounts. “Rather than facilitate client choice, [Stifel] made it more difficult for clients to transition their accounts and encouraged others not to do so because of its frivolous allegations,” the advisors stated in their arguments.

The panel also ordered Stifel to reimburse Sapient’s private equity backer, Lee Equity, nearly $121 thousand for discovery-related costs and to cover the entire $45.6 thousand in hearing session fees.

While the arbitrators awarded attorneys' fees, they denied the advisors' claims for damages, which included $4.1 million for defamation, $7 million for breach of the Protocol for Broker Recruiting, and more than $50 million in punitive damages.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law

Return to Archive

TESTIMONIALS

Previous
Next

If the regulators are after you, and are trying to make a case against you, and you are going to contest their allegations against you, make sure you have the best securities industry defense lawyers, Eccleston Law Firm. My case was spun into a combination of penalties including fines, cash settlements, CE courses and suspension. They were the best I have seen in action. When all was said and done, they had done their magic, my situation was negotiated and settled with a simple "letter of caution" and a case closed without action. It is the most important legal business decision you will ever make, make it Eccleston Law.

Rick R.

LATEST NEWS AND ARTICLES

May 21, 2025
Wave of ERISA Class Actions Challenges 401(k) Plan Practices

A surge in class action lawsuits under the Employee Retirement Income Security Act (ERISA) is forcing employers to reevaluate how they manage workplace retirement plans.

May 20, 2025
IRS Clarifies Theft Loss Deductions for Scam Victims Amid Rising Fraud Risks

The IRS has issued new guidance clarifying when victims of financial scams can claim theft loss deductions on their taxes. According to Financial Planning, the guidance offers much-needed direction amid increasingly sophisticated fraud schemes targeting consumers.

May 19, 2025
The Lower Barriers and Higher Risks of Private Market Investing

Investing in private companies is becoming more accessible—but whether that is a good thing remains up for debate.