STIFEL, NICOLAUS & COMPANY, INCORPORATED

Allegations: SEC ADMIN RELEASES 33-9845; 34-75239, JUNE 18, 2015: THE SECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED AGAINST STIFEL, NICOLAUS & COMPANY, INC. ("RESPONDENT"). RESPONDENT WILLFULLY VIOLATED SECTION 17(A)(2) OF THE SECURITIES ACT. THIS MATTER INVOLVES VIOLATIONS OF AN ANTIFRAUD PROVISION OF THE FEDERAL SECURITIES LAWS IN CONNECTION WITH RESPONDENT'S UNDERWRITING OF CERTAIN MUNICIPAL SECURITIES OFFERINGS. RESPONDENT, A REGISTERED BROKER-DEALER, CONDUCTED INADEQUATE DUE DILIGENCE IN CERTAIN OFFERINGS AND AS A RESULT, FAILED TO FORM A REASONABLE BASIS FOR BELIEVING THE TRUTHFULNESS OF CERTAIN MATERIAL REPRESENTATIONS IN OFFICIAL STATEMENTS ISSUED IN CONNECTION WITH THOSE OFFERINGS. THIS RESULTED IN RESPONDENT OFFERING AND SELLING MUNICIPAL SECURITIES ON THE BASIS OF MATERIALLY MISLEADING DISCLOSURE DOCUMENTS. THE VIOLATIONS WERE SELF-REPORTED BY RESPONDENT TO THE COMMISSION PURSUANT TO THE DIVISION OF ENFORCEMENT'S (THE "DIVISION") MUNICIPALITIES CONTINUING DISCLOSURE COOPERATION (MCDC) INITIATIVE.

Sanction: Cease and Desist

How it ended: Order

Summary: STIFEL VOLUNTARILY PARTICIPATED IN THE MCDC INITIATIVE AND IS ONE OF 36 FIRMS THAT ENTERED INTO A SETTLEMENT WITH THE SEC. FINRA HAS ESTABLISHED A STREAMLINED PROCESS TO PERMIT THE SETTLING FIRMS TO SEEK A WAIVER OF THE STATUTORY DISQUALIFICATION RESULTING FROM THE SETTLEMENT. STIFEL HAS SUBMITTED AN MC-400-A APPLICATION PURSUANT TO THE FINRA STREAMLINED PROCESS, IN ORDER TO OBTAIN A WAIVER OF THE STATUTORY DISQUALIFICATION, WHICH IT ANTICIPATES RECEIVING

Resolved: Jun 18, 2015

Allegations: THE FIRM SELF-REPORTED TO FINRA THAT IT FAILED TO APPLY THE WAIVERS TO MUTUAL FUND PURCHASES MADE BY ELIGIBLE CUSTOMERS AND INSTEAD SOLD THEM CLASS A SHARES WITH A FRONT-END SALES CHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES AND HIGHER ONGOING FEES AND EXPENSES. THESE SALES DISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING SUCH CUSTOMERS TO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY. THE FIRM FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND PROCEDURES REASONABLY DESIGNED TO ENSURE THAT ELIGIBLE CUSTOMERS WHO PURCHASED MUTUAL FUND SHARES RECEIVED THE BENEFIT OF APPLICABLE SALES CHARGE WAIVERS. THE FIRM FAILED TO REASONABLY SUPERVISE THE APPLICATION OF SALES CHARGE WAIVERS TO ELIGIBLE MUTUAL FUND SALES.

Sanction: Other

How it ended: Acceptance, Waiver & Consent(AWC)

Summary: IN OCTOBER 2014, THE FIRM BEGAN A REVIEW TO DETERMINE WHETHER IT HAD PROVIDED AVAILABLE SALES CHARGE WAIVERS TO ELIGIBLE CUSTOMERS. BASED ON THIS REVIEW, IN APRIL 2015, THE FIRM SELF-REPORTED TO FINRA THAT ELIGIBLE CUSTOMERS HAD NOT RECEIVED AVAILABLE SALES CHARGE WAIVERS.

Resolved: Oct 27, 2015

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT EFFECTED CUSTOMER TRANSACTIONS IN A MUNICIPAL SECURITY IN AN AMOUNT LOWER THAN THE MINIMUM DENOMINATION OF THE ISSUE WHICH WERE NOT SUBJECT TO AN EXCEPTION UNDER THE APPLICABLE RULE.

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Mar 24, 2016

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND ENTRY OF FINDINGS THAT, ON CERTAIN OCCASIONS DURING THE PERIOD OF JANUARY 1, 2010 THROUGH JUNE 1, 2011, THE FIRM VIOLATED: NYSE RULE 92(A) BY ENTERING AN ORDER TO BUY OR SELL AN NYSE-LISTED SECURITY FOR AN ACCOUNT IN WHICH THE FIRM HAD AN INTEREST (A "PROPRIETARY ORDER") WHILE KNOWINGLY IN POSSESSION OF A CUSTOMER ORDER THAT COULD BE EXECUTED AT THE SAME PRICE, THAT TRADED ALONG WITH, OR AHEAD OF, THE CUSTOMER ORDER WITHOUT THE CUSTOMER'S CONSENT; SECTION 11(A) OF THE EXCHANGE ACT AND NYSE RULE 90(A) BY CAUSING FIRM-ASSOCIATED FLOOR BROKERS TO EFFECT PROPRIETARY TRANSACTIONS ON THE NYSE FLOOR WITHOUT YIELDING PRIORITY, PARITY AND PRECEDENCE TO NON-PROPRIETARY ORDERS; NYSE RULE 410(B) BY ALLOWING PROPRIETARY ORDERS TO BE TRANSMITTED TO THE NYSE FLOOR WITHOUT THE REQUIRED "G" NOTATION THAT WOULD ENABLE SUCH ORDERS TO BE HANDLED PURSUANT TO SECTION 11(A)(1)(G) OF THE EXCHANGE ACT; NYSE RULE 2010 BY FAILING TO CROSS CERTAIN CUSTOMER ORDERS DESCRIBED ABOVE; SECTION 10B-10(A)(2) OF THE EXCHANGE ACT BY FAILING TO PROVIDE WRITTEN DISCLOSURES TO CUSTOMERS CONCERNING THE FIRM'S CORRECT CAPACITY AND, WHEN ACTING AS PRINCIPAL IN A NON-MARKET MAKING CAPACITY, FAILING TO PROVIDE COMPLETE AND ACCURATE WRITTEN DISCLOSURES TO CUSTOMERS ABOUT THE DIFFERENCE BETWEEN THE CUSTOMER'S PRICE AND THE FIRM'S CONTEMPORANEOUS PRICE; AND NYSE RULE 342 BY FAILING TO REASONABLY SUPERVISE AND IMPLEMENT ADEQUATE CONTROLS REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH NYSE RULES 90, 92, 410(B), 2010 AND SECTION 11(A) OF THE EXCHANGE ACT WITH RESPECT TO THE TRANSMISSION AND EXECUTION OF CERTAIN AGENCY AND PROPRIETARY TRANSACTIONS EFFECTED ON THE NYSE FLOOR.

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Mar 29, 2016

Allegations: FINRA ALLEGED THAT, PRIOR TO PERFORMING ITS END OF THE WEEK CUSTOMER RESERVE CALCULATIONS, THE FIRM SUBSTITUTED LOANS SECURED BY CUSTOMER-OWNED SECURITIES WITH LOANS SECURED BY FIRM-OWNED COLLATERAL, POTENTIALLY REDUCING THE AMOUNT THE FIRM WAS REQUIRED TO DEPOSIT INTO ITS SPECIAL RESERVE BANK ACCOUNT. THESE SUBSTITUTIONS WERE BASED ON ADMINISTRATIVE CONVENIENCE AND, AT ALL RELEVANT TIMES, THE FIRM HAD SUFFICIENT CAPITAL TO PROPERLY FUND THE RESERVE ACCOUNT HAD THE LOAN SUBSTITUTIONS NOT OCCURRED, ASSUMING THAT ANY ADDITIONAL DEPOSITS WERE EVEN NECESSARY. FINRA ALSO ALLEGED THAT, BASED ON ITS IMPROPER TREATMENT OF VARIOUS CASH AND SECURITIES BALANCES IN THE ACCOUNTS OF A NEWLY-ACQUIRED INTRODUCING BROKER-DEALER, THE FIRM INCORRECTLY CALCULATED ITS PROPRIETARY ACCOUNTS OF INTRODUCING BROKERS AND DEALERS RESERVE AND CUSTOMER RESERVE DEPOSIT REQUIREMENTS CAUSING SEVERAL HINDSIGHT DEFICIENCIES IN 2013 AS WELL AS THE FILING OF INACCURATE FOCUS REPORTS, AND THE MAINTENANCE OF INACCURATE BOOKS AND RECORDS. AS A RESULT OF THESE VIOLATIONS, FINRA ALLEGED THAT THE FIRM DID NOT ESTABLISH AND MAINTAIN REASONABLE SUPERVISORY SYSTEMS AND PROCEDURES DESIGNED TO DETECT AND PREVENT THESE VIOLATIONS.

How it ended: Acceptance, Waiver & Consent(AWC)

Summary: THE FIRM FULLY COOPERATED WITH FINRA'S INQUIRY AND RESOLVED THIS MATTER WITHOUT ADMITTING OR DENYING THE FINDINGS. IN ADDITION, THE FIRM UNDERTOOK SIGNIFICANT REMEDIATION EFFORTS TO ENHANCE ITS TRAINING AND CONTROLS FOR COMPLYING WITH SEA RULE 15C 3-3, RULE 17A-3(A)(11) AND RULE 17A-5. THE FIRM RETAINED AN OUTSIDE CONSULTANT WHO CONDUCTED AN EXTENSIVE REVIEW OF THE FIRM'S RELEVANT PROCESSES AND CONTROLS. CONSISTENT WITH THE CONSULTANT'S RECOMMENDATIONS, THE FIRM REVISED CERTAIN WRITTEN SUPERVISORY PROCEDURES FOR REGULATORY REPORTING, DEVELOPED NEW PROCESSES TO IMPROVE COMMUNICATION BETWEEN ITS REGULATORY REPORTING DEPARTMENT AND OTHER DEPARTMENTS WITHIN THE FIRM RESPONSIBLE FOR PRODUCING AND PROVIDING KEY REGULATORY INFORMATION, AND DEVELOPED ENHANCED TRAINING FOR FIRM PERSONNEL INVOLVED IN THE REGULATORY REPORTING PROCESS.

Resolved: Apr 11, 2016

Allegations: ON JANUARY 4, 2017, AN ADMINISTRATIVE CONSENT ORDER ("ORDER") WAS ENTERED AGAINST STIFEL, NICOLAUS & COMPANY, INC. ("STIFEL NICOLAUS") AND A FORMER REGISTERED REPRESENTATIVE ASSOCIATED WITH STIFEL NICOLAUS BY THE SECURITIES DIVISION OF THE MISSISSIPPI SECRETARY OF STATE ("DIVISION") RESOLVING AN INVESTIGATION INTO CERTAIN ACTIVITIES OCCURRING IN TWO BRANCH OFFICES DURING THE PERIOD OF SEPTEMBER 2000 THROUGH NOVEMBER 2013. WITHOUT ADMITTING OR DENYING THE FINDINGS IN THE ORDER, STIFEL NICOLAUS AGREED TO THE ENTRY OF THE ORDER DIRECTING STIFEL NICOLAUS TO CEASE AND DESIST FROM VIOLATING RULE 5.15 OF THE MISSISSIPPI SECURITIES ACT OF 2010, A BOOKS AND RECORDS RULE, AND TO PAY THE DIVISION $49,500 ON ITS BEHALF AS WELL AS $500 ON BEHALF OF THE FORMER REGISTERED REPRESENTATIVE.

Sanction: Other

How it ended: Order

Resolved: Jan 4, 2017

Allegations: THE SEC ALLEGED THAT STIFEL VIOLATED SECTION 206(4) OF THE INVESTMENT ADVISERS ACT OF 1940 (THE "ADVISERS ACT") AND RULE 206(4)-7 THEREUNDER, WHICH REQUIRE INVESTMENT ADVISERS TO ADOPT AND IMPLEMENT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT VIOLATIONS OF THE ADVISERS ACT AND THE RULES THEREUNDER.

Sanction: Cease and Desist

How it ended: Order

Summary: IN MARCH 2017, STIFEL CONSENTED TO THE ENTRY OF A CEASE AND DESIST ORDER ("ORDER") BY THE SEC IN WHICH STIFEL WAS FOUND TO HAVE VIOLATED SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER BY FAILING TO ADOPT OR IMPLEMENT ADEQUATE POLICIES AND PROCEDURES TO TRACK AND DISCLOSE THE TRADING AWAY PRACTICES OF CERTAIN THIRD PARTY INVESTMENT MANAGERS IN SEVERAL OF STIFEL'S DISCRETIONARY WRAP FEE PROGRAMS, INCLUDING INFORMATION ABOUT ADDITIONAL COSTS INCURRED BY CLIENTS AS A RESULT OF THE INVESTMENT MANAGER'S USE OF ANOTHER BROKER TO EXECUTE TRANSACTIONS AWAY FROM STIFEL. STIFEL NEITHER ADMITTED NOR DENIED THE FINDINGS CONTAINED IN THE ORDER, EXCEPT THOSE RELATED TO JURISDICTION AND THE SUBJECT MATTER OF THE PROCEEDING. STIFEL MADE SEVERAL UNDERTAKINGS ENUMERATED IN THE ORDER RELATED TO THE TRADING AWAY PRACTICES OF THIRD PARTY MANAGERS, INCLUDING A REVIEW AND UPDATE OF ITS POLICIES AND PROCEDURES, PROVIDING INFORMATION TO FINANCIAL ADVISORS AND CLIENTS, AND TRAINING FINANCIAL ADVISORS. STIFEL WAS ORDERED TO PAY A CIVIL PENALTY OF $300,000 AND ORDERED TO CEASE AND DESIST FROM COMMITTING OR CAUSING VIOLATIONS OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER.

Resolved: Mar 13, 2017

Allegations: IN JUNE 2017, STIFEL ENTERED INTO AN ACCEPTANCE, WAIVER AND CONSENT WITH FINRA TO SETTLE ALLEGATIONS THAT STIFEL DID NOT PROVIDE TIMELY DISCLOSURES TO A MUNICIPAL ISSUER IN CONNECTION WITH ITS ROLE AS PLACEMENT AGENT IN A PLACEMENT OF BONDS ISSUED BY THE MUNICIPAL ISSUER IN ACCORDANCE WITH INTERPRETIVE GUIDANCE ISSUED BY THE MUNICIPAL SECURITIES RULEMAKING BOARD ("MSRB") REGARDING MSRB RULE G-23. IN MAY 2012, STIFEL RECOMMENDED THAT THE ISSUER DO A PLACEMENT, IN LIEU OF A PUBLIC OFFERING, IN ORDER TO SAVE ON DEBT SERVICE COSTS. THE ISSUER ACCEPTED STIFEL'S RECOMMENDATION AND AGREED THAT STIFEL WOULD SERVE AS PLACEMENT AGENT. HOWEVER, STIFEL DID NOT PROVIDE THE DISCLOSURES REGARDING ITS ROLE IN A TIMELY MANNER. AS A RESULT, THE FIRM WAS ALLEGED TO HAVE VIOLATED MSRB RULE G-23 BY SERVING AS BOTH FINANCIAL ADVISOR AND PLACEMENT AGENT ON THE SAME ISSUE. WHILE NOT ADMITTING OR DENYING THE ALLEGATIONS, STIFEL AGREED TO A REGULATORY CENSURE AND A MONETARY FINE OF $125,000.

How it ended: Acceptance, Waiver & Consent(AWC)

Summary: IN JUNE 2017, STIFEL ENTERED INTO AN ACCEPTANCE, WAIVER AND CONSENT WITH FINRA TO SETTLE ALLEGATIONS THAT STIFEL DID NOT PROVIDE TIMELY DISCLOSURES TO A MUNICIPAL ISSUER IN CONNECTION WITH ITS ROLE AS PLACEMENT AGENT IN A PLACEMENT OF BONDS ISSUED BY THE MUNICIPAL ISSUER IN ACCORDANCE WITH INTERPRETIVE GUIDANCE ISSUED BY THE MUNICIPAL SECURITIES RULEMAKING BOARD ("MSRB") REGARDING MSRB RULE G-23. IN MAY 2012, STIFEL RECOMMENDED THAT THE ISSUER DO A PLACEMENT, IN LIEU OF A PUBLIC OFFERING, IN ORDER TO SAVE ON DEBT SERVICE COSTS. THE ISSUER ACCEPTED STIFEL'S RECOMMENDATION AND AGREED THAT STIFEL WOULD SERVE AS PLACEMENT AGENT. HOWEVER, STIFEL DID NOT PROVIDE THE DISCLOSURES REGARDING ITS ROLE IN A TIMELY MANNER. AS A RESULT, THE FIRM WAS ALLEGED TO HAVE VIOLATED MSRB RULE G-23 BY SERVING AS BOTH FINANCIAL ADVISOR AND PLACEMENT AGENT ON THE SAME ISSUE. WHILE NOT ADMITTING OR DENYING THE ALLEGATIONS, STIFEL AGREED TO A REGULATORY CENSURE AND A MONETARY FINE OF $125,000.

Resolved: Jun 27, 2017

Allegations: FAILURE TO SUPERVISE THE SALE OF AUCTION RATE SECURITIES.

Sanction: Cease and Desist

How it ended: Consent

Resolved: Nov 3, 2017

Allegations: FAILURE TO TIMELY REPORT A REGULATORY ACTION ON A PROFESSIONAL LICENSE AND PROVIDED AN INCORRECT ANSWER TO THE INSURANCE LICENSE APPLICATION/RENEWAL.

Sanction: Other

How it ended: Consent

Resolved: Nov 13, 2017

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IN 18 INSTANCES BETWEEN APRIL 2014 TO JUNE 2014, THE FIRM ACCEPTED AND HELD 12 CUSTOMER ORDERS IN OVER-THE-COUNTER (OTC) SECURITIES, TRADED FOR ITS OWN ACCOUNT AT PRICES THAT WOULD HAVE SATISFIED THE CUSTOMER ORDERS, AND FAILED TO EXECUTE OR IMMEDIATELY EXECUTE THE CUSTOMER ORDERS UP TO THE SIZE AND AT THE SAME PRICE AT WHICH IT TRADED FOR ITS OWN ACCOUNT OR AT A BETTER PRICE. THE FINDINGS STATED THAT WITH RESPECT TO 16 OF THE 18 INSTANCES, THE FIRM ASSERTED THE "NO-KNOWLEDGE EXCEPTION," WHICH IS CODIFIED IN SUPPLEMENTARY MATERIAL .02 OF FINRA RULE 5320. THE FIRM'S SYSTEM OF INTERNAL CONTROLS (INFORMATION BARRIERS) DID NOT MEET THE REQUIREMENTS SET FORTH IN SUPPLEMENTARY MATERIAL .02(B), BECAUSE TRADERS AT ONE DESK HAD THE ABILITY TO VIEW THE OUTSTANDING CUSTOMER ORDERS THAT WERE ACCEPTED AND HELD BY ANOTHER DESK. THE FINDINGS ALSO STATED THAT DURING THE SECOND QUARTER OF 2014 AND FOURTH QUARTER OF 2014 THROUGH THE FIRST QUARTER OF 2015, THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS AND REGULATIONS, AND NASD RULES CONCERNING COMPLIANCE WITH FINRA RULE 5320 AND SUPPLEMENTARY MATERIAL .02 OF RULE 5320. THE FIRM DID NOT HAVE POLICIES OR PROCEDURES THAT PREVENTED ITS TRADING DESKS THAT WERE SEPARATED BY INFORMATION BARRIERS FROM OBTAINING KNOWLEDGE REGARDING ORDERS OR TRADING ACTIVITY OF THE OTHER DESKS. THE FIRM'S WRITTEN SUPERVISORY PROCEDURES FAILED TO INCLUDE A SUPERVISORY REVIEW THAT ENSURED THAT THE FIRM'S INFORMATION BARRIERS, FOR WHICH THE FIRM RELIED ON THE "NO-KNOWLEDGE EXCEPTION," WERE OPERATING APPROPRIATELY AND PERMISSIONS THAT THE FIRM'S EMPLOYEES HAD TO THE FIRM'S SYSTEMS WERE GRANTED APPROPRIATELY. IN ADDITION, ALTHOUGH THE FIRM HAD A TRADING AHEAD EXCEPTION REPORT, IT FAILED TO CAPTURE ANY OF THE TRADING AHEAD INSTANCES IDENTIFIED. THE EXCEPTION REPORT WAS ALSO FLAWED AND UNRELIABLE DURING THE REVIEW PERIODS. THE FINDINGS ALSO INCLUDED THAT DURING THE SECOND QUARTER OF 2014, FOURTH QUARTER OF 2014 THROUGH THE FIRST QUARTER OF 2015 AND FOURTH QUARTER OF 2015, THE FIRM FAILED TO REPORT AN INFORMATION BARRIER IDENTIFIER WITH ITS ORDER AUDIT TRAIL SYSTEM (OATS) SUBMISSIONS FOR 76 ORDERS.

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Jan 26, 2018

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO REPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE) 200 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIZED PRODUCTS WITHIN THE TIME REQUIRED BY FINRA RULE 6730.

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Jan 26, 2018

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITS FORMER REGISTERED REPRESENTATIVE ENTERED ORDERS IN THE EQUITY SHARES OF A SECURITY ON BEHALF OF CLIENT ACCOUNTS THAT HE IMPROPERLY MARKED AS "UNSOLICITED" DESPITE THE FACT THAT SUCH ORDERS WERE SOLICITED, CAUSING THE FIRM'S BOOKS AND RECORDS TO BE INACCURATE. THE FINDINGS STATED THAT THE FIRM HAD PROGRAMMED ITS ORDER MANAGEMENT SYSTEM TO BLOCK THE FORMER REGISTERED REPRESENTATIVE FROM ENTERING SOLICITED ORDERS IN THE SECURITY. THE RESTRICTION WAS LIFTED, BUT THE SYSTEMIC BLOCK WAS NOT IMMEDIATELY REMOVED. UPON DISCOVERING, THAT THE SYSTEMIC BLOCK HAD NOT BEEN LIFTED AND THAT THE FIRM'S FORMER REGISTERED REPRESENTATIVE HAD BEEN MISMARKING ORDERS, IT REPROGRAMMED ITS ORDER MANAGEMENT SYSTEM AND HAD ITS FORMER REGISTERED REPRESENTATIVE CORRECT THE MISMARKED ORDERS. THEREAFTER, THE FIRM CORRECTED ITS BOOKS AND RECORDS.

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Apr 26, 2018

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT ACCEPTED AND HELD CUSTOMER ORDERS IN OVER-THE-COUNTER (OTC) SECURITIES TRADED CUSTOMER ORDERS IN OTC SECURITIES FOR ITS OWN ACCOUNT AT PRICES THAT WOULD HAVE SATISFIED THE CUSTOMER ORDERS, AND FAILED TO EXECUTE OR IMMEDIATELY EXECUTE THE CUSTOMER ORDERS UP TO THE SIZE AND AT THE SAME PRICE AT WHICH IT TRADED FOR ITS OWN ACCOUNT OR AT A BETTER PRICE. THE FINDINGS STATED THAT THE FIRM TRANSMITTED INACCURATE REPORTS TO OATS. THE FIRM'S OATS REPORTS CONTAINED AN INACCURATE INFORMATION BARRIER IDENTIFIER. THE CAUSE OF THE INACCURATE REPORTS, WHICH WAS SYSTEMIC, WAS A CHANGE THAT THE FIRM'S VENDOR MADE TO THE MANNER IN WHICH THE FIRM REPORTED INFORMATION BARRIER IDENTIFIERS. FOR EACH STOCK IN WHICH THE FIRM MAKES A MARKET, THE STOCK IS ASSIGNED TO A PARTICULAR TRADER AT THE FIRM. BECAUSE OF THE CHANGE BY THE FIRM'S VENDOR, INSTEAD OF REPORTING INFORMATION BARRIER IDENTIFIERS BASED ON THE ACTUAL TRADER WHO HANDLED THE ORDER, THE FIRM REPORTED INFORMATION BARRIER IDENTIFIERS BASED ON THE TRADER WHO WAS ASSIGNED THE STOCK. AS A RESULT, THE FIRM HAS SUBMITTED AN ESTIMATED 452,024 REPORTS TO OATS WITH AN INACCURATE INFORMATION BARRIER IDENTIFIER. THE FINDINGS ALSO STATED THAT THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS AND REGULATIONS, AND THE RULES OF FINRA, CONCERNING COMPLIANCE WITH FINRA RULE 7450. SPECIFICALLY, THE FIRM'S WRITTEN SUPERVISORY PROCEDURES (WSPS) FAILED TO INCLUDE A REVIEW FOR THE REPORTING OF INFORMATION BARRIER IDENTIFIERS TO OATS, AND THE FIRM DID NOT OTHERWISE REVIEW ITS REPORTING OF INFORMATION BARRIER IDENTIFIERS TO OATS.

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Sep 13, 2018

Allegations: WITHOUT ADMITTING OR DENYING THE ALLEGED VIOLATIONS AND STATEMENT OF FACTS, THE FIRM CONSENTED TO THE ENTRY OF A CEASE AND DESIST ORDER ("ORDER") BY THE COMMONWEALTH OF MASSACHUSETTS (THE "COMMONWEALTH") IN WHICH THE FIRM WAS FOUND TO HAVE VIOLATED SECTION 204(A)(2)(J) OF MASS. GEN. LAWS CH. 110A BY FAILING TO REASONABLY SUPERVISE A REGISTERED REPRESENTATIVE'S ACTIVITIES IN CONNECTION WITH DIRECTED BROKERAGE ACCOUNTS THAT WERE MANAGED BY A THIRD PARTY INVESTMENT ADVISER THAT IS REGISTERED WITH THE COMMONWEALTH

Sanction: Cease and Desist

How it ended: Consent

Summary: ON DECEMBER 19, 2018, THE COMMONWEALTH ENTERED A CONSENT ORDER AGAINST THE FIRM IN WHICH THE FIRM WAS CENSURED AND ORDERED TO (A) PAY A FINE IN THE AMOUNT OF $300,000 THAT WAS PAID BY SUBMISSION OF A WIRE ON DECEMBER 20, 2018, (B) CEASE AND DESIST FROM FURTHER CONDUCT IN VIOLATION OF THE ACT AND CORRESPONDING REGULATIONS THEREUNDER, AND (C) COMPLETE THE AFOREMENTIONED UNDERTAKINGS BY THE DEADLINES PRESCRIBED IN THE ORDER

Resolved: Dec 19, 2018

Allegations: THE SEC ALLEGED THAT STIFEL WILLFULLY VIOLATED SECTIONS 206(2) AND 207 OF THE INVESTMENT ADVISERS ACT OF 1940 (THE "ADVISERS ACT") AS A RESULT OF (A) ITS INADEQUATE DISCLOSURE OF CONFLICTS OF INTEREST RELATED TO (A) THE SELECTION OF MUTUAL FUND SHARE CLASSES THAT CHARGED 12B-1 FEES, WHICH ARE RECURRING FEES DEDUCTED FROM FUND'S ASSETS, WHEN AN ALTERNATIVE SHARE CLASS WAS AVAILABLE THAT DID NOT CHARGE A 12B-1 FEE; AND (B) THE RECEIPT OF 12B-1 FEES IN CONNECTION WITH THESE INVESTMENTS.

Sanction: Other

How it ended: Order

Summary: IN MARCH 2019, STIFEL, ALONG WITH 78 OTHER INVESTMENT ADVISERS WHO VOLUNTARILY PARTICIPATED IN THE SEC'S SHARE CLASS SELECTION DISCLOSURE INITIATIVE, CONSENTED TO THE ENTRY OF AN ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER (THE "ORDER") BY THE SEC INSTITUTED PURSUANT TO SECTIONS 203(E) AND 203(K) OF THE ADVISERS ACT WITHOUT ADMITTING OR DENYING THE FINDINGS THEREIN EXCEPT THOSE RELATED TO JURISDICTION AND THE SUBJECT MATTER OF THE PROCEEDINGS. THE ORDER ENTERED AGAINST STIFEL ALLEGED THAT STIFEL WILLFULLY VIOLATED SECTIONS 206(2) AND 207 OF THE ADVISERS ACT AS A RESULT OF ITS INADEQUATE DISCLOSURE OF CONFLICTS OF INTEREST RELATED TO (A) THE SELECTION OF MUTUAL FUND SHARE CLASSES THAT CHARGED 12B-1 FEES, WHICH ARE RECURRING FEES DEDUCTED FROM FUND'S ASSETS, WHEN AN ALTERNATIVE SHARE CLASS WAS AVAILABLE THAT DID NOT CHARGE A 12B-1 FEE; AND (B) THE RECEIPT OF 12B-1 FEES IN CONNECTION WITH THESE INVESTMENTS. THE SEC DID NOT IMPOSE A CIVIL PENALTY AGAINST STIFEL IN RECOGNITION OF THE FACT THAT STIFEL SELF-REPORTED THE ISSUE TO THE SEC. HOWEVER, STIFEL WAS CENSURED AND ORDERED TO CEASE-AND-DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND FUTURE VIOLATIONS OF SECTIONS 206(2) AND 207 OF THE ADVISERS ACT, PAY DISGORGEMENT AND PRE-JUDGMENT INTEREST IN THE AMOUNT OF $6,037,175.98 TO AFFECTED INVESTORS, AND COMPLY WITH SEVERAL UNDERTAKINGS RELATED TO NOTIFYING AFFECTED INVESTORS OF THE TERMS OF THE ORDER.

Resolved: Mar 11, 2019

Allegations: THE ORDER ALLEGED THAT STIFEL WILLFULLY VIOLATED THE RECORDKEEPING AND REPORTING REQUIREMENTS OF SECTION 17(A)(1) OF THE EXCHANGE ACT AND RULE 17A-4(J) THEREUNDER BY FAILING TO FURNISH PROMPTLY TRUE AND COMPLETE TRADING INFORMATION IN RESPONSE TO ELECTRONIC BLUE SHEET ("EBS") REQUESTS MADE BY SEC STAFF OVER A PERIOD OF APPROXIMATELY FOUR YEARS. IN ADDITION, THE ORDER ALLEGED THAT STIFEL WILLFULLY VIOLATED EXCHANGE ACT RULE 17A-25 BY FAILING TO SUBMIT ELECTRONICALLY CERTAIN SECURITIES TRANSACTION INFORMATION TO THE SEC THROUGH THE EBS SYSTEM IN RESPONSE TO REQUESTS MADE BY THE SEC.

Sanction: Cease and Desist

How it ended: Order

Summary: IN SEPTEMBER 2019, AN ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, PURSUANT TO SECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 203(E) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER (THE "ORDER") WAS ENTERED AGAINST STIFEL BY THE SEC IN CONNECTION WITH STIFEL'S FAILURE TO SUBMIT COMPLETE AND ACCURATE DATA IN RESPONSE TO ELECTRONIC BLUE SHEETS ("EBS") REQUESTS FROM THE SEC, RESULTING IN THE REPORTING OF EBS THAT WAS INCOMPLETE OR DEFICIENT. AS A RESULT OF THE ORDER, STIFEL WAS CENSURED AND ORDERED TO (A) CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 17(A)(1) OF THE EXCHANGE ACT AND RULES 17A- 4(J) AND 17A-25 PROMULGATED THEREUNDER; AND (B) PAY A CIVIL MONETARY PENALTY IN THE AMOUNT OF $2,700,000 THAT WAS PAID ON SEPTEMBER 18, 2019. AS DETAILED IN THE ORDER, STIFEL ENGAGED IN VOLUNTARY REMEDIAL EFFORTS TO CORRECT AND IMPROVE ITS EBS PROCESS AND CONTROL ENVIRONMENT, INCLUDING BUT NOT LIMITED TO INCREASED COMPLIANCE STAFF AND REMEDIAL EXPERTISE, ENHANCED EBS SUBMISSION REVIEW PROCEDURES AND CONTROLS, AND INCREASED BUDGETS FOR EBS COMPLIANCE.

Resolved: Sep 16, 2019

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT, FROM JANUARY 2012 THROUGH DECEMBER 2016, IT FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM, AND FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE WSPS, THAT WERE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH FINRA'S SUITABILITY RULE AS IT PERTAINS TO EARLY ROLLOVERS OF UNIT INVESTMENT TRUSTS (UIT). THE FINDINGS STATED THAT THE FIRM'S WSPS REFERENCED A UIT SWITCH LETTER THAT REPRESENTATIVES COULD USE WHEN A CLIENT SOLD A POSITION IN A UIT BEFORE MATURITY TO PURCHASE ANOTHER UIT OR MUTUAL FUND. THE PURPOSE OF THE SWITCH LETTER WAS TO CONFIRM A CUSTOMER'S UNDERSTANDING OF THE TRANSACTION SWITCH AS WELL AS THE RELATED RISKS AND EXPENSES. NONETHELESS, THE WSPS DID NOT PROVIDE GUIDANCE ABOUT WHEN SWITCH LETTERS SHOULD BE SENT OR HOW FIRM SUPERVISORS SHOULD MONITOR FOR POTENTIALLY UNSUITABLE PATTERNS OF EARLY UIT ROLLOVERS. THE FIRM USED AN AUTOMATED SURVEILLANCE ALERT TO IDENTIFY POTENTIAL EARLY UIT ROLLOVERS, AS WELL AS POTENTIAL SWITCHES BETWEEN UITS AND MUTUAL FUNDS (THE SWITCH ALERT). HOWEVER, THE SWITCH ALERT FAILED TO FLAG UIT SWITCHES. THE FIRM DISCOVERED THAT THE SWITCH ALERT DID NOT IDENTIFY SWITCHES FROM ONE UIT TO ANOTHER. DESPITE THIS KNOWLEDGE, THE FIRM DID NOT INFORM ITS BRANCH MANAGERS THAT THE SWITCH ALERT WAS NOT FUNCTIONING AS INTENDED. THE FIRM LATER DEVELOPED AN ALTERNATIVE SURVEILLANCE SYSTEM TO FLAG UIT-TO-UIT SWITCHES. HOWEVER, THAT ALERT WAS NOT REASONABLY DESIGNED TO DETECT UNSUITABLE UIT SWITCHES BECAUSE IT ONLY FLAGGED UITS THAT WERE HELD FOR LESS THAN A YEAR EVEN IF THE UIT HAD A LONG-TERM MATURITY DATE. FURTHERMORE, THE ALTERNATIVE SYSTEM LATER STOPPED FUNCTIONING AS INTENDED, BUT THE FIRM DID NOT DISCOVER THAT FACT UNTIL A LATER DATE. AS A RESULT, ALTHOUGH THE FIRM SUBSEQUENTLY FIXED THE SWITCH ALERT, ITS COMPLIANCE DEPARTMENT CONTINUED TO USE THE FIRM'S ALTERNATIVE SYSTEM TO IDENTIFY UIT SWITCHES. THE FIRM FAILED TO IDENTIFY THAT ITS REPRESENTATIVES RECOMMENDED POTENTIALLY UNSUITABLE EARLY UIT ROLLOVERS, INCLUDING SERIES-TO-SERIES ROLLOVERS THAT MAY HAVE CAUSED CUSTOMERS TO INCUR $1,891,188.13 IN SALES CHARGES THAT THEY WOULD NOT HAVE INCURRED HAD THEY HELD THE UITS UNTIL THEIR MATURITY DATES. THE FINDINGS ALSO STATED THAT THE FIRM SENT SWITCH LETTERS TO CUSTOMERS THAT CONTAINED INACCURATE OR MISSING INFORMATION ABOUT THE COSTS THAT THEY INCURRED AS A RESULT OF EARLY UIT ROLLOVERS. THE FIRM DID NOT VERIFY THE ACCURACY OF THE INFORMATION CONTAINED IN CERTAIN OF THE SWITCH LETTERS, APART FROM AD HOC REVIEWS CONDUCTED AS PART OF THE FIRM'S BRANCH INSPECTION PROGRAM. CERTAIN UIT SWITCH LETTERS UNDERSTATED THE SALES CHARGES ASSOCIATED WITH THE SWITCH, AND OTHERS DID NOT LIST ANY SALES CHARGE ASSOCIATED WITH THE NEW UIT PURCHASED BY THE CUSTOMER, EVEN THOUGH THE SWITCHES RESULTED IN THE CUSTOMERS INCURRING NEW SALES CHARGES. COLLECTIVELY, THE SWITCH LETTERS DISCLOSED SALES CHARGES OF APPROXIMATELY $330,440, WHEN THE ACTUAL SALES CHARGES INCURRED BY CUSTOMERS WERE MORE THAN $1,249,052.

How it ended: Acceptance, Waiver & Consent(AWC)

Summary: IN MAY OF 2020 THE FIRM ENTERED INTO A LETTER OF ACCEPTANCE, WAIVER AND CONSENT (AWC) WITH FINRA WHEREBY THE FIRM, WITHOUT ADMITTING OR DENYING ANY SPECIFIC FINDINGS, CONSENTED TO FINDINGS THAT THE FROM JANUARY 2012 THROUGH DECEMBER 2016 THE FIRM FAILED TO ESTABLISH AND MAINTAIN AND ENFORCE WRITTEN SUPERVISORY PROCEDURES (WSPS) THAT WERE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH FINRAS SUITABILITY RULE AS IT PERTAINS TO EARLY ROLLOVERS OF UNIT INVESTMENT TRUSTS. AS A RESULT THE FIRM VIOLATED NASD RULE 3010; FINRA RULE 3110 AND FINRA RULE 2010. ADDITIONALLY, THE FIRM CONSENTED TO A FURTHER VIOLATION OF FINRA RULE 2010 IN CONNECTION WITH THE SENDING OF "SWITCH LETTERS" TO CUSTOMERS CONTAINING INACCURATE INFORMATION ABOUT THE COSTS THEY INCURRED AS THE RESULT OF EARLY UIT ROLLOVERS. THE FIRM AGREES TO PAY A FINE OF $1.75 MILLION AND RESTITUTION IN THE AMOUNT OF $1,891,188.13, PLUS INTEREST. THE FINRA STAFF DID NOT REQUIRE ANY REMEDIAL UNDERTAKINGS BY THE FIRM IN THE AWC. THE FIRM HAS IMPLEMENTED VARIOUS ENHANCEMENTS TO ITS SUPERVISION AND COMPLIANCE OVERSIGHT OF EARLY ROLLOVERS OF UITS WHICH IT BELIEVES ADDRESSES THE ALLEGED DEFICIENCIES IDENTIFIED BY FINRA. THOSE ENHANCEMENTS INCLUDE IMPLEMENTATION OF A SWITCH ALERT NOTIFICATION SYSTEM FOR EARLY ROLLOVERS, A RISK-BASED APPROACH OF COMPLIANCE OVERSIGHT FOR EARLY ROLLOVER ACTIVITY AND A PERIODIC "LOOKBACK" BY THE COMPLIANCE DEPARTMENT OF EARLY ROLLOVER ACTIVITY BY SELECTED FINANCIAL ADVISORS.

Resolved: May 28, 2020

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT LACKED A SUPERVISORY SYSTEM, INCLUDING WSPS, REASONABLY DESIGNED TO DETECT AND PREVENT THE FIRM AND ITS REGISTERED REPRESENTATIVES FROM EXECUTING PRE-ARRANGED TRANSACTIONS. THE FINDINGS STATED THAT THE FIRM DID NOT HAVE EXCEPTION REPORTS, TRADE ALERTS, OR OTHER SUPERVISORY MECHANISMS DESIGNED TO ENABLE ITS SUPERVISORS TO IDENTIFY POTENTIAL PRE-ARRANGED TRANSACTIONS. INSTEAD, THE FIRM RELIED ON ITS SUPERVISORS TO DETECT AND PREVENT SUCH TRANSACTIONS AS PART OF THEIR DAILY REVIEW OF THOUSANDS OF TRANSACTIONS ON TRADE BLOTTERS. THOUGH THE FIRM' S AUTOMATED REVIEWS OF ITS TRADE BLOTTERS FLAGGED SOME TYPES OF PROHIBITED TRANSACTIONS FOR SUPERVISORY REVIEW, THEY DID NOT FLAG PRE-ARRANGED TRANSACTIONS.

How it ended: Acceptance, Waiver & Consent(AWC)

Summary: ON SEPTEMBER 1, 2020, STIFEL ENTERED INTO A LETTER OF ACCEPTANCE, WAIVER, AND CONSENT ("AWC") WITH FINRA TO SETTLE ALLEGATIONS THAT, DURING THE PERIOD OF OCTOBER 31, 2017 THROUGH FEBRUARY 27, 2020, THE FIRM LACKED A SUPERVISORY SYSTEM, INCLUDING WRITTEN SUPERVISORY PROCEDURES (WSPS), REASONABLY DESIGNED TO DETECT AND PREVENT STIFEL AND ITS REGISTERED REPRESENTATIVES FROM EXECUTING PREARRANGED TRANSACTIONS IN VIOLATION OF MUNICIPAL SECURITIES RULEMAKING BOARD (MSRB) RULE G-27. WHILE NOT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRM CONSENTED TO A CENSURE AND MONETARY FINE OF $40,000 TO SETTLE THE ALLEGATIONS. AS INDICATED IN THE AWC, STIFEL UPDATED ITS SUPERVISORY SYSTEM AND WSPS REGARDING THE CITED SUPERVISORY DEFICIENCIES PRIOR TO THE ENTRY OF THE AWC.

Resolved: Sep 1, 2020

Allegations: DURING THE PERIOD APRIL 1, 2018 THROUGH SEPTEMBER 30, 2020 STIFEL FAILED TO MAINTAIN AND ENFORCE WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT THE POTENTIAL MISUSE OF MATERIAL, NONPUBLIC INFORMATION AND TO SUPERVISE AND ENFORCE REASONABLE INFORMATION BARRIERS IN CONNECTION WITH THEIR STOCK BUYBACK TRADING ACTIVITY.

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Feb 8, 2021

Allegations: FIRM FAILED TO PROPERLY SUPERVISE A REGISTERED REPRESENTATIVE WHO HAD A CLIENT HEAVILY CONCENTRATED IN THE PRECIOUS METAL SECTOR.

How it ended: Consent

Resolved: Mar 31, 2021

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH, DOCUMENT, AND MAINTAIN A SYSTEM OF RISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES REASONABLY DESIGNED TO MANAGE THE FINANCIAL RISKS OF ITS MARKET ACCESS BUSINESS ACTIVITY. THE FINDINGS STATED THAT THE FIRM IMPLEMENTED WITHIN ONE OF ITS ORDER MANAGEMENT SYSTEMS (OMSS) A HARD BLOCK CONTROL TO PREVENT THE ENTRY OF ORDERS EXCEEDING 200 PERCENT OF THE 20-DAY AVERAGE DAILY VOLUME (ADV) IN A SECURITY. THE FIRM WAS UNABLE TO PROVIDE A REASONABLE BASIS FOR THE 200 PERCENT THRESHOLD OR PROVIDE DOCUMENTATION TO DEMONSTRATE THAT THE ADV CONTROL WAS SET AT A REASONABLE LEVEL TO PREVENT THE ENTRY OF ERRONEOUS ORDERS. THE FIRM LATER LOWERED ITS ADV CONTROL, BUT DID NOT PROVIDE DOCUMENTATION DEMONSTRATING THAT THE CONTROL WAS SET AT A REASONABLE LEVEL TO PREVENT THE ENTRY OF ERRONEOUS ORDERS. IN ADDITION, WITHIN ITS OMSS, THE FIRM EMPLOYED SINGLE ORDER VOLUME (SOV) CONTROLS AND SINGLE ORDER MAXIMUM NOTIONAL VALUE CONTROLS BUT DID NOT SUFFICIENTLY DOCUMENT THAT THEY ACCOUNTED FOR THE TRADING CHARACTERISTICS OF INDIVIDUAL SECURITIES OR THE TRADING HISTORY OF ITS CUSTOMERS. THE FIRM ALSO HAD AN ORDER RATE LIMIT CONTROL IN ITS OMSS THAT BLOCKED ORDERS THAT BREACHED THE FIRM'S ADV, SOV OR MAX NOTIONAL CONTROLS NOTED ABOVE, BUT OVER A 30- SECOND WINDOW. BECAUSE OF THE DEFICIENCIES WITH THE FIRM'S ADV, SOV AND MAX NOTIONAL CONTROLS, THE ORDER RATE LIMIT CONTROL WAS SIMILARLY NOT REASONABLY DESIGNED. THE FINDINGS ALSO STATED THAT THE FIRM'S WRITTEN SUPERVISORY PROCEDURES REGARDING CREDIT CONTROL BLOCKS WERE NOT REASONABLY DESIGNED BECAUSE THEY DID NOT ACCOUNT FOR TRADING ON MORE THAN ONE OMS. THE FIRM LATER AMENDED ITS PROCEDURES TO SPECIFICALLY ADDRESS SETTING CUSTOMER CREDIT LIMITS ACROSS MULTIPLE OMSS. AS A RESULT OF THE FOREGOING, THE FIRM FAILED TO ESTABLISH AND MAINTAIN FINANCIAL RISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES THAT WERE REASONABLY DESIGNED TO PREVENT THE ENTRY OF ORDERS THAT EXCEED APPROPRIATE PRE-SET CREDIT OR CAPITAL THRESHOLDS IN THE AGGREGATE FOR EACH CUSTOMER AND THE BROKER OR DEALER. THE FINDINGS ALSO INCLUDED THAT THE FIRM DID NOT HAVE CONTROLS TO PREVENT THE ENTRY OF ORDERS SOLICITED FROM INSTITUTIONAL CUSTOMERS IN RESTRICTED SECURITIES. AS A RESULT OF THE FORGOING, THE FIRM FAILED TO ESTABLISH AND MAINTAIN A SYSTEM OF RISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES THAT WERE REASONABLY DESIGNED TO PREVENT THE ENTRY OF ORDERS THAT DID NOT COMPLY WITH REGULATORY REQUIREMENTS. THEREFORE, THE FIRM VIOLATED EXCHANGE ACT § 15(C) (3), RULES 15C3-5(B), 15C3-5(C)(1)(I), 15C3-5(C)(1)(II), 15C3-5(C)(2) THEREUNDER, AND NYSE RULE 3110(A) AND (B).

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Jun 13, 2022

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH, DOCUMENT, AND MAINTAIN A SYSTEM OF RISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES REASONABLY DESIGNED TO MANAGE THE FINANCIAL RISKS OF ITS MARKET ACCESS BUSINESS ACTIVITY. THE FINDINGS STATED THAT THE FIRM IMPLEMENTED WITHIN ONE OF ITS ORDER MANAGEMENT SYSTEMS (OMSS) A HARD BLOCK CONTROL TO PREVENT THE ENTRY OF ORDERS EXCEEDING 200 PERCENT OF THE 20-DAY AVERAGE DAILY VOLUME (ADV) IN A SECURITY. THE FIRM WAS UNABLE TO PROVIDE A REASONABLE BASIS FOR THE 200 PERCENT THRESHOLD OR PROVIDE DOCUMENTATION TO DEMONSTRATE THAT THE ADV CONTROL WAS SET AT A REASONABLE LEVEL TO PREVENT THE ENTRY OF ERRONEOUS ORDERS. THE FIRM LATER LOWERED ITS ADV CONTROL, BUT DID NOT PROVIDE DOCUMENTATION DEMONSTRATING THAT THE CONTROL WAS SET AT A REASONABLE LEVEL TO PREVENT THE ENTRY OF ERRONEOUS ORDERS. IN ADDITION, WITHIN ITS OMSS, THE FIRM EMPLOYED SINGLE ORDER VOLUME (SOV) CONTROLS AND SINGLE ORDER MAXIMUM NOTIONAL VALUE CONTROLS BUT DID NOT SUFFICIENTLY DOCUMENT THAT THEY ACCOUNTED FOR THE TRADING CHARACTERISTICS OF INDIVIDUAL SECURITIES OR THE TRADING HISTORY OF ITS CUSTOMERS. THE FIRM ALSO HAD AN ORDER RATE LIMIT CONTROL IN ITS OMSS THAT BLOCKED ORDERS THAT BREACHED THE FIRM'S ADV, SOV OR MAX NOTIONAL CONTROLS NOTED ABOVE, BUT OVER A 30- SECOND WINDOW. BECAUSE OF THE DEFICIENCIES WITH THE FIRM'S ADV, SOV AND MAX NOTIONAL CONTROLS, THE ORDER RATE LIMIT CONTROL WAS SIMILARLY NOT REASONABLY DESIGNED. THE FINDINGS ALSO STATED THAT THE FIRM'S WRITTEN SUPERVISORY PROCEDURES REGARDING CREDIT CONTROL BLOCKS WERE NOT REASONABLY DESIGNED BECAUSE THEY DID NOT ACCOUNT FOR TRADING ON MORE THAN ONE OMS. THE FIRM LATER AMENDED ITS PROCEDURES TO SPECIFICALLY ADDRESS SETTING CUSTOMER CREDIT LIMITS ACROSS MULTIPLE OMSS. AS A RESULT OF THE FOREGOING, THE FIRM FAILED TO ESTABLISH AND MAINTAIN FINANCIAL RISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES THAT WERE REASONABLY DESIGNED TO PREVENT THE ENTRY OF ORDERS THAT EXCEED APPROPRIATE PRE-SET CREDIT OR CAPITAL THRESHOLDS IN THE AGGREGATE FOR EACH CUSTOMER AND THE BROKER OR DEALER. THE FINDINGS ALSO INCLUDED THAT THE FIRM DID NOT HAVE CONTROLS TO PREVENT THE ENTRY OF ORDERS SOLICITED FROM INSTITUTIONAL CUSTOMERS IN RESTRICTED SECURITIES. AS A RESULT OF THE FORGOING, THE FIRM FAILED TO ESTABLISH AND MAINTAIN A SYSTEM OF RISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES THAT WERE REASONABLY DESIGNED TO PREVENT THE ENTRY OF ORDERS THAT DID NOT COMPLY WITH REGULATORY REQUIREMENTS. THEREFORE, THE FIRM VIOLATED EXCHANGE ACT § 15(C) (3), RULES 15C3-5(B), 15C3-5(C)(1)(I), 15C3-5(C)(1)(II), 15C3-5(C)(2) THEREUNDER, AND NASDAQ RULES 3010(A), 2010A, AND NASDAQ GENERAL RULE 9, SECTIONS 1(A) AND 20(A).

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Jun 14, 2022

Allegations: STIFEL FAILED TO SUPERVISE ITS AGENTS: (1) STIFEL DID NOT REASONABLY SUPERVISE MASSACHUSETTS REGISTERED AGENT'S (A FORMER EMPLOYEE) TRADING IN CUSTOMER ACCOUNTS; (2) STIFEL DID NOT REASONABLY MONITOR USE OF OFF-CHANNEL ELECTRONIC DEVICES BY AGENTS TO CONDUCT STIFEL BUSINESS; (3) STIFEL DID NOT REASONABLY REVIEW AND APPROVE RETAIL COMMUNICATIONS PRIOR TO DISTRIBUTION.

Sanction: Civil and Administrative Penalt(ies) /Fine(s)

How it ended: Consent

Summary: WITHOUT ADMITTING OR DENYING THE VIOLATION OF LAW CONTAINED IN THE CONSENT ORDER, STIFEL AGREED TO THE ABOVE DESCRIBED SANCTIONS. IN ADDITION, THE DIVISION AND STIFEL AGREED THAT THE CONSENT ORDER IS NOT INTENDED TO FORM THE BASIS OF ANY DISQUALIFICATIONS UNDER SECTION 3(A)(39) OF THE SECURITIES EXCHANGE ACT OF 1934; 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; SECTION 204(A)(2) OF THE UNIFORM SECURITIES ACT OF 1956 OR SECTION 412(D) OF THE UNIFORM SECURITIES ACT OF 2002. FURTHERMORE, THE DIVISION AND STIFEL AGREED THAT THE CONSENT 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. FINALLY, THE CONSENT ORDER IS NOT INTENDED TO BE A FINAL ORDER BASED UPON VIOLATIONS OF ANY MASSACHUSETTS STATUTE, RULE, OR REGULATION THAT PROHIBIT FRAUDULENT, MANIPULATIVE, OR DECEPTIVE CONDUCT.

Resolved: Apr 28, 2023

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO REVIEW AND MONITOR THE TRANSMITTAL OF CUSTOMER FUNDS WHEN A BROKER HAD POWER OF ATTORNEY OVER A CUSTOMER'S ACCOUNT AND FAILED TO REASONABLY FOLLOW UP ON RED FLAGS CONCERNING A BROKER OF THEIRS. THE FINDINGS STATED THAT THE BROKER WAS THE POWER OF ATTORNEY ON THE BROKERAGE ACCOUNT OF A SENIOR CUSTOMER, WHICH PROVIDED HIM THE AUTHORITY TO WRITE CHECKS ON THE CUSTOMER'S BEHALF. THE BROKER CONVERTED AT LEAST $105,000 FROM THE CUSTOMER BY WRITING CHECKS ON HER ACCOUNT THAT HE MADE PAYABLE TO HIMSELF OR TO A BANK ACCOUNT THAT HE CONTROLLED. THE FIRM LATER CEASED GRANTING EXCEPTIONS TO ITS PROHIBITION ON BROKERS FROM SERVING AS POWER OF ATTORNEY FOR A NON-FAMILY MEMBER ACCOUNT AND MEMORIALIZED ITS PROHIBITION WITHOUT EXCEPTIONS AND FULLY REIMBURSED THE CUSTOMERS ESTATE FOR THE BROKER'S MISCONDUCT. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLY FOLLOW UP ON RED FLAGS OF UNSUITABLE TRADING BY A DIFFERENT BROKER IN OPTIONS AND A HIGH-RISK MICROCAP SECURITY. THE FIRM FAILED TO REASONABLY RESPOND TO CERTAIN ALERTS CONTAINED IN REPORTS THAT THE BROKER'S OPTIONS TRADES WERE POTENTIALLY UNSUITABLE. THE BROKER RECOMMENDED MORE THAN 100 SPECULATIVE OPTIONS TRADES IN ONE OF THE BROKERAGE ACCOUNTS OF THE CUSTOMER, WHO WAS A 64-YEAR-OLD RETIREE WITH NO OPTIONS EXPERIENCE OR KNOWLEDGE, CAUSING THE ACCOUNT TO LOSE NEARLY 80 PERCENT OF ITS FUNDS. THE FIRM WAS AWARE OF THE VOLUME OF OPTIONS TRADING AND DISCUSSED THE TRADING IN THE ACCOUNT WITH THE REPRESENTATIVE. HOWEVER, DESPITE THE FACT THAT THE TRADING GENERATED MORE THAN 10 ALERTS, THE FIRM FAILED TO REASONABLY INVESTIGATE WHETHER THE TRADING WAS CONSISTENT WITH THE CUSTOMER'S INVESTMENT OBJECTIVES AND RISK TOLERANCE. INSTEAD, THE FIRM APPROVED A CHANGE IN THE CUSTOMER'S INVESTMENT OBJECTIVES FROM "GROWTH AND INCOME" TO "SPECULATIVE/ACTIVE TRADING/COMPLEX STRATEGIES" BASED ON BROKER'S REPRESENTATIONS AND SUPPRESSED SEVERAL SUBSEQUENT OPTIONS ALERTS INVOLVING THE CUSTOMER'S ACCOUNT. AN ADDITIONAL CUSTOMER OF THE BROKER WITH NO OPTIONS EXPERIENCE, A GROWTH AND INCOME OBJECTIVE, AND A MODERATE RISK TOLERANCE WAS RECOMMENDED CALL OPTIONS THAT RESULTED IN $27,745.94 IN LOSSES. THE FIRM ALSO FAILED TO REASONABLY RESPOND TO RED FLAGS OF THIS BROKER'S UNSUITABLE RECOMMENDATIONS OF A HIGH-RISK MICROCAP SECURITY. THE BROKER RECOMMENDED A STOCK TO ADDITIONAL CUSTOMERS THAT HAD FALLEN SUBSTANTIALLY PRIOR TO THE PURCHASES DUE TO (AMONG OTHER THINGS) SUBSTANTIAL DOUBTS BEING RAISED IN PUBLIC REPORTS ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A GOING CONCERN. AFTER EXCESSIVE COMMISSION ALERTS WERE GENERATED REGARDING SOME OF THESE TRADES, THE FIRM NOTED THAT BROKER WAS PURCHASING A "COLLAPSING EQUITY" AND FLAGGED THIS TRADING ACTIVITY FOR FURTHER MONITORING; YET THE FIRM FAILED TO TAKE STEPS OTHER THAN ASKING THE BROKER ABOUT THE CUSTOMERS' KNOWLEDGE OF AND COMFORT WITH THE PURCHASES. THE BROKER CONTINUED TO RECOMMEND ADDITIONAL PURCHASES OF THE STOCK AS THE PRICE CONTINUED TO FALL AND THE CUSTOMERS HAD INCURRED REALIZED LOSSES OF $53,498 DUE TO THIS TRADING.

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Mar 15, 2024

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRMS CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT THEY FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE A SUPERVISORY SYSTEM, INCLUDING WSPS, REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THEIR SUITABILITY OBLIGATIONS IN CONNECTION WITH NON-TRADITIONAL EXCHANGE-TRADED PRODUCT (NT-ETP) TRANSACTIONS. THE FINDINGS STATED THAT ALTHOUGH THE FIRMS REVISED THEIR WSPS FOLLOWING A PREVIOUSLY ISSUED AWC, THE WSPS STILL FAILED TO PROVIDE REASONABLE GUIDANCE ABOUT HOW TO IDENTIFY AND ADDRESS POTENTIALLY UNSUITABLE NT-ETP RECOMMENDATIONS. THE WSPS DID NOT REQUIRE SUPERVISORS TO TAKE ANY ACTION TO ASSESS WHETHER NT-ETP RECOMMENDATIONS, INCLUDING RECOMMENDED EXIT OR HOLD STRATEGIES, WERE CONSISTENT WITH THE INTENDED HOLDING PERIODS IDENTIFIED IN THE PRODUCTS' PROSPECTUSES. IN ADDITION, THE FIRMS' SYSTEM FOR IDENTIFYING AND ADDRESSING POTENTIALLY UNSUITABLE NT-ETP RECOMMENDATIONS WAS NOT REASONABLY DESIGNED. IN RESPONSE TO THE PREVIOUS AWC, THE FIRMS IMPLEMENTED A NEW AUTOMATED ALERT THAT WAS DESIGNED TO FLAG, FOR SUPERVISORY REVIEW, ALL NT-ETP POSITIONS THAT HAD BEEN HELD FOR LONGER THAN 30 DAYS. HOWEVER, THE FIRMS ALMOST IMMEDIATELY DEACTIVATED THE ALERT AFTER IT RESULTED IN OVER 2,000 HITS PER DAY. EVEN AFTER THE FIRMS REACTIVATED THE ALERT, SUPERVISORS HAD BROAD DISCRETION TO RESOLVE THE ALERTS, BUT THE FIRMS DID NOT PROVIDE SUPERVISORS WITH ANY TRAINING ON HOW TO EVALUATE THE RED FLAGS PRESENTED BY THE LONG HOLDING PERIODS. AS A RESULT, SUPERVISORS ROUTINELY CLEARED THE 30-DAY HOLDING-PERIOD ALERTS WITHOUT ANY ANALYSIS OF THE SUITABILITY OF THE UNDERLYING NT-ETP RECOMMENDATIONS THAT LED TO THE ALERTS. FURTHER, IN RESPONSE TO DISCOVERING THAT REPRESENTATIVES WERE ROUTINELY RECOMMENDING LONG-TERM HOLDING PERIODS FOR NT-ETPS, THE FIRMS' COMPLIANCE DEPARTMENT INSTITUTED A CLEAN-UP EFFORT THAT INVOLVED TRACKING NT-ETP POSITIONS HELD FOR MORE THAN 30 CALENDAR DAYS AND ENCOURAGING (BUT NOT REQUIRING) SUPERVISORS TO SPEAK WITH REPRESENTATIVES AND CUSTOMERS ABOUT SELLING AGED POSITIONS. HOWEVER, THE CLEAN-UP WAS NOT SUFFICIENT IN CERTAIN INSTANCES TO PREVENT REPRESENTATIVES FROM CONTINUING TO RECOMMEND A STRATEGY OF BUYING AND THEN HOLDING THESE PRODUCTS FOR PERIODS WELL BEYOND THE PERIODS IDENTIFIED IN THE PRODUCTS' PROSPECTUSES. AS A RESULT OF THESE SUPERVISORY FAILURES, THE FIRMS FAILED TO DETECT OR ADDRESS HUNDREDS OF OCCASIONS IN WHICH THE FIRMS' REPRESENTATIVES RECOMMENDED THAT CUSTOMERS BUY AND THEN HOLD NT-ETPS FOR POTENTIALLY UNSUITABLE PERIODS. SOME OF THE AFFECTED CUSTOMERS WERE SENIORS, AND MANY HAD CONSERVATIVE INVESTMENT OBJECTIVES OR MODERATE RISK TOLERANCES. IN TOTAL, THE FIRMS' REPRESENTATIVES RECOMMENDED AT LEAST 438 DAILY-RESET NT-ETP POSITIONS THAT WERE HELD FOR MORE THAN SEVEN DAYS, AND 45 MONTHLY RESET NT-ETPS THAT WERE HELD FOR MORE THAN 60 DAYS. COLLECTIVELY, THESE TRANSACTIONS RESULTED IN REALIZED CUSTOMER LOSSES OF $1,289,937.17 IN ACCOUNTS.

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Mar 25, 2024

Allegations: STIFEL, NICOLAUS & COMPANY, INCORPORATED VIOLATED SEA RULE 15C3-5 AND BZX RULE 3.2 IN THAT THE FIRM'S RISK MANAGEMENT CONTROLS AND PROCEDURES WERE NOT REASONABLY DESIGNED TO PREVENT THE ENTRY OF ERRONEOUS ORDERS ON BZX, BY REJECTING ORDERS THAT EXCEED APPROPRIATE PRICE OR SIZE PARAMETERS, ON AN ORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME.

Sanction: Civil and Administrative Penalt(ies) /Fine(s)

How it ended: Consent

Resolved: May 16, 2024

Allegations: STIFEL, NICOLAUS & COMPANY, INCORPORATED VIOLATED SEA RULE 15C3-5 AND EDGX RULE 3.2 IN THAT THE FIRM'S RISK MANAGEMENT CONTROLS AND PROCEDURES WERE NOT REASONABLY DESIGNED TO PREVENT THE ENTRY OF ERRONEOUS ORDERS ON EDGX, BY REJECTING ORDERS THAT EXCEED APPROPRIATE PRICE OR SIZE PARAMETERS, ON AN ORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME.

Sanction: Civil and Administrative Penalt(ies) /Fine(s)

How it ended: Consent

Resolved: May 16, 2024

Allegations: FAILURE TO ADEQUATELY SUPERVISE REPS SALE OF HIGH YIELD BONDS.

Sanction: Civil and Administrative Penalt(ies) /Fine(s)

How it ended: Consent

Summary: FAHSHOLTZ, MICHAEL; STIFEL, NICOLAUS & CO. - S-19-2660-23-CO01 - CONSENT ORDER ON MAY 26, 2024, THE SECURITIES DIVISION ENTERED A CONSENT ORDER WITH RESPONDENTS MICHAEL FAHSHOLTZ ("FAHSHOLTZ," CRD #2057306) AND FAHSHOLTZ'S FORMER BROKER-DEALER, STIFEL, NICOLAUS & CO., INC. ("STIFEL," CRD #793) (COLLECTIVELY, "THE RESPONDENTS"). AS SET FORTH IN THE CONSENT ORDER, FAHSHOLTZ SOLD SIGNIFICANT QUANTITIES OF HIGH-YIELD BONDS (COMMONLY KNOWN AS JUNK BONDS) TO MANY CLIENTS WHOSE AGE AND RISK TOLERANCE WERE INCONSISTENT WITH HIGH CONCENTRATIONS OF RISKY BONDS. THE CONSENT ORDER ALLEGES THAT THESE SALES VIOLATED RCW 21.20.702, THE SUITABILITY PROVISION OF THE SECURITIES ACT OF WASHINGTON. THE CONSENT ORDER FURTHER ALLEGES THAT STIFEL FAILED TO ADEQUATELY MONITOR FAHSHOLTZ'S SALE OF HIGH-YIELD BONDS AND TO NOTE VARIOUS DISCREPANCIES BETWEEN FAHSHOLTZ'S JUSTIFICATIONS FOR HIS SALES AND HIS CUSTOMERS' STATED RISK TOLERANCE, INVESTMENT OBJECTIVES, AND OUTSIDE HOLDINGS, AS REQUIRED BY RCW 21.20.110. IN THE CONSENT ORDER, THE RESPONDENTS NEITHER ADMIT NOR DENY THE SECURITIES DIVISION'S FINDINGS OF FACT AND CONCLUSIONS OF LAW, BUT FAHSHOLTZ AGREES TO CEASE AND DESIST FROM VIOLATING THE SUITABILITY PROVISIONS OF THE SECURITIES ACT OF WASHINGTON. FAHSHOLTZ FURTHER AGREES TO PAY A FINE OF $10,000; STIFEL AGREES TO PAY A FINE OF $10,000 AND INVESTIGATIVE COSTS OF $20,000. THE RESPONDENTS WAIVED THEIR RIGHT TO A HEARING AND TO JUDICIAL REVIEW OF THIS MATTER.

Resolved: May 26, 2024

Allegations: THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED AGAINST STIFEL, NICOLAUS & COMPANY, INC. ("STIFEL" OR "RESPONDENT"). IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS, RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT THAT THE COMMISSION HAS DETERMINED TO ACCEPT. THE COMMISSION FINDS THAT FROM AT LEAST JANUARY 2020 (THE "RELEVANT PERIOD"), STIFEL PERSONNEL SENT AND RECEIVED OFF-CHANNEL COMMUNICATIONS THAT RELATED TO ITS BROKER-DEALER BUSINESS. ADDITIONALLY, DURING THE RELEVANT PERIOD, STIFEL PERSONNEL SENT AND RECEIVED OFF-CHANNEL COMMUNICATIONS RELATED TO THE INVESTMENT ADVISER'S RECEIPT, DISBURSEMENT OR DELIVERY OF FUNDS OR SECURITIES. STIFEL DID NOT MAINTAIN OR PRESERVE THE SUBSTANTIAL MAJORITY OF THESE WRITTEN COMMUNICATIONS. STIFEL'S FAILURE WAS FIRM-WIDE AND INVOLVED PERSONNEL AT VARIOUS LEVELS OF AUTHORITY. STIFEL'S SUPERVISORS, WHO WERE RESPONSIBLE FOR SUPERVISING JUNIOR PERSONNEL, ROUTINELY COMMUNICATED OFF-CHANNEL USING THEIR PERSONAL DEVICES. IN FACT, SENIOR PERSONNEL RESPONSIBLE FOR SUPERVISING JUNIOR PERSONNEL THEMSELVES FAILED TO COMPLY WITH STIFEL'S POLICIES AND PROCEDURES BY COMMUNICATING, THROUGH NON-APPROVED METHODS, ON THEIR PERSONAL DEVICES ABOUT RESPONDENT'S BUSINESS. STIFEL'S WIDESPREAD FAILURE TO IMPLEMENT ITS POLICIES AND PROCEDURES THAT PROHIBIT SUCH COMMUNICATIONS LED TO ITS FAILURE TO REASONABLY SUPERVISE ITS PERSONNEL WITHIN THE MEANING OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACT AND SECTION 203(E)(6) OF THE ADVISERS ACT. DURING THE RELEVANT PERIOD, STIFEL RECEIVED AND RESPONDED TO COMMISSION SUBPOENAS FOR DOCUMENTS AND RECORDS REQUESTS IN VARIOUS COMMISSION INVESTIGATIONS. AS A RESULT, STIFEL'S RECORDKEEPING FAILURES LIKELY IMPACTED THE COMMISSION'S ABILITY TO CARRY OUT ITS REGULATORY FUNCTIONS AND INVESTIGATE VIOLATIONS OF THE FEDERAL SECURITIES LAWS ACROSS THESE INVESTIGATIONS. THE COMMISSION STAFF UNCOVERED STIFEL'S MISCONDUCT AFTER COMMENCING A RISK BASED INITIATIVE TO INVESTIGATE THE USE OF OFF-CHANNEL AND UNPRESERVED COMMUNICATIONS AT BROKER DEALERS AND REGISTERED INVESTMENT ADVISERS. STIFEL HAS INITIATED A REVIEW OF ITS RECORDKEEPING FAILURES AND BEGUN A PROGRAM OF REMEDIATION. AS SET FORTH IN THE UNDERTAKINGS BELOW, STIFEL WILL RETAIN AN INDEPENDENT COMPLIANCE CONSULTANT TO REVIEW AND ASSESS STIFEL'S REMEDIAL STEPS RELATING TO ITS RECORDKEEPING PRACTICES, POLICIES AND PROCEDURES, RELATED SUPERVISORY PRACTICES, AND EMPLOYMENT ACTIONS. AS A RESULT, STIFEL WILLFULLY VIOLATED SECTION 17(A) OF THE EXCHANGE ACT AND RULE 17A-4(B)(4) THEREUNDER AND WILLFULLY VIOLATED SECTION 204 OF THE ADVISERS ACT AND RULE 204-2(A) (7) THEREUNDER. STIFEL FAILED REASONABLY TO SUPERVISE ITS PERSONNEL WITH A VIEW TO PREVENTING OR DETECTING CERTAIN OF ITS SUPERVISED PERSONS' AIDING AND ABETTING VIOLATIONS OF SECTION 17(A) OF THE EXCHANGE ACT AND RULE 17A-4(B)(4) THEREUNDER, WITHIN THE MEANING OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACT AND SECTION 204 OF THE ADVISERS ACT AND RULE 204-2(A)(7) THEREUNDER, WITHIN THE MEANING OF SECTION 203(E)(6) OF THE ADVISERS ACT.

Sanction: Cease and Desist

How it ended: Order

Summary: AS A RESULT, STIFEL WILLFULLY VIOLATED SECTION 17(A) OF THE EXCHANGE ACT AND RULE 17A-4(B)(4) THEREUNDER AND WILLFULLY VIOLATED SECTION 204 OF THE ADVISERS ACT AND RULE 204-2(A)(7) THEREUNDER. STIFEL FAILED REASONABLY TO SUPERVISE ITS PERSONNEL WITH A VIEW TO PREVENTING OR DETECTING CERTAIN OF ITS SUPERVISED PERSONS' AIDING AND ABETTING VIOLATIONS OF SECTION 17(A) OF THE EXCHANGE ACT AND RULE 17A-4(B)(4) THEREUNDER, WITHIN THE MEANING OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACT AND SECTION 204 OF THE ADVISERS ACT AND RULE 204-2(A)(7) THEREUNDER, WITHIN THE MEANING OF SECTION 203(E)(6) OF THE ADVISERS ACT. ACCORDINGLY, IT IS HEREBY ORDERED THAT STIFEL SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 17(A) OF THE EXCHANGE ACT AND RULE 17A-4 THEREUNDER AND SECTION 204 OF THE ADVISERS ACT AND RULE 204-2 THEREUNDER, IS CENSURED, SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE ORDER, AND SHALL PAY A CIVIL MONEY PENALTY OF $35,000,000. THE CIVIL MONEY PENALTY WAS PAID ON OCTOBER 4TH, 2024.

Resolved: Sep 24, 2024

Allegations: WITHOUT ADMITTING OR DENYING ANY STATEMENTS OF FACTS OR VIOLATIONS OF LAW, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO REVIEW AND MONITOR THE CHARGING OF REASONABLE COMMISSIONS TO CUSTOMERS ON CERTAIN LOW PRINCIPAL AMOUNT EQUITY TRANSACTIONS.

Sanction: Civil and Administrative Penalt(ies) /Fine(s)

How it ended: Consent

Resolved: Jun 4, 2025

Allegations: ON JULY 8TH, STIFEL SETTLED AN ADMINISTRATIVE PROCEEDING WITH THE NYSE FINDING THAT, IN CONNECTION WITH MANUALLY ROUTED OPTIONS ORDERS, STIFEL FAILED TO RECORD ORDER RECEIPT OR TRANSMISSION TIMES ACCURATELY AND DID NOT DETECT OR REMEDIATE THOSE REPEATED INACCURACIES.

Sanction: Other

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Jul 18, 2025

Allegations: WITHOUT ADMITTING OR DENYING ANY STATEMENTS OF FACTS OR VIOLATIONS OF LAW, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO REVIEW AND MONITOR THE CHARGING OF REASONABLE COMMISSIONS TO CUSTOMERS ON CERTAIN LOW PRINCIPAL AMOUNT EQUITY TRANSACTIONS.

Sanction: Civil and Administrative Penalt(ies) /Fine(s)

How it ended: Consent

Resolved: Aug 14, 2025

Allegations: WITHOUT ADMITTING OR DENYING ANY STATEMENTS OF FACTS OR VIOLATIONS OF LAW, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO REVIEW AND MONITOR THE CHARGING OF REASONABLE COMMISSIONS TO CUSTOMERS ON CERTAIN LOW PRINCIPAL AMOUNT EQUITY TRANSACTIONS.

Sanction: Civil and Administrative Penalt(ies) /Fine(s)

How it ended: Consent

Resolved: Aug 7, 2025

Allegations: FINDINGS THAT IT VIOLATED RULE 606(A) OF REGULATION NMS BY PUBLISHING 16 INACCURATE OR INCOMPLETE INFORMATION IN ITS RULE 606 REPORTS. THE FINDINGS STATED THAT THE REPORTS INACCURATELY DISCLOSED THE NET AGGREGATE AMOUNT OF PAYMENT FOR ORDER FLOW RECEIVED BY THE FIRM, PAYMENT RECEIVED BY THE FIRM RELATED TO PROFIT-SHARING RELATIONSHIPS, TRANSACTION FEES PAID BY THE FIRM, AND TRANSACTION REBATES RECEIVED BY THE FIRM. ADDITIONALLY, IN 11 QUARTERLY RULE 606 REPORTS, THE FIRM MISIDENTIFIED THREE BROKER- DEALERS AS EXECUTION VENUES WHICH DID NOT QUALITY AS EXECUTION VENUES FOR PURPOSES OF RULE 606 REPORTING. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM, INCLUDING WSPS, REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 606(A). THE FIRM RETAINED A THIRD-PARTY VENDOR TO PREPARE ITS RULE 606 REPORTS, USING DATA PROVIDED BY THE FIRM TO GENERATE STATISTICAL INFORMATION CONCERNING THE ROUTING OF CUSTOMER ORDERS. HOWEVER, THE FIRM'S WSPS DID NOT REQUIRE, AND THE FIRM DID NOT CONDUCT, ANY REVIEW TO ENSURE THAT THE DATA PROVIDED TO THE VENDOR WAS COMPLETE AND ACCURATE. THE FIRM ALSO HAD NO SUPERVISORY SYSTEM OR WSPS REQUIRING REVIEW OF THE MATERIAL ASPECTS DISCLOSURES IN ITS RULE 606 REPORTS BEFORE THEY WERE PUBLISHED. THE FIRM'S WSPS DID NOT REQUIRE THE FIRM TO REVIEW ITS RULE 606 REPORTS AFTER THEY WERE PUBLISHED TO ACHIEVE COMPLIANCE WITH THE DISCLOSURE REQUIREMENTS OF RULE 606(A). THE FIRM HAS UPDATED ITS SUPERVISORY SYSTEM RELATED TO RULE 606 REPORTING, INCLUDING BY ESTABLISHING SUPERVISORY REVIEWS OF THE INFORMATION PROVIDED TO THE VENDOR AND PUBLISHED IN THE FIRM'S RULE 606 REPORTS AND UPDATED ITS WSPS TO REFLECT THESE NEW PROCEDURES.

How it ended: Acceptance, Waiver & Consent(AWC)

Resolved: Aug 14, 2025

Allegations: WITHOUT ADMITTING OR DENYING ANY STATEMENTS OF FACTS OR VIOLATIONS OF LAW, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO REVIEW AND MONITOR THE CHARGING OF REASONABLE COMMISSIONS TO CUSTOMERS ON CERTAIN LOW PRINCIPAL AMOUNT EQUITY TRANSACTIONS.

Sanction: Civil and Administrative Penalt(ies) /Fine(s)

How it ended: Consent

Resolved: Aug 7, 2025

Allegations: WITHOUT ADMITTING OR DENYING ANY STATEMENTS OF FACTS OR VIOLATIONS OF LAW, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO REVIEW AND MONITOR THE CHARGING OF REASONABLE COMMISSIONS TO CUSTOMERS ON CERTAIN LOW PRINCIPAL AMOUNT EQUITY TRANSACTIONS.

Sanction: Civil and Administrative Penalt(ies) /Fine(s)

How it ended: Consent

Resolved: Sep 3, 2025

Allegations: WITHOUT ADMITTING OR DENYING ANY STATEMENTS OF FACTS OR VIOLATIONS OF LAW, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO REVIEW AND MONITOR THE CHARGING OF REASONABLE COMMISSIONS TO CUSTOMERS ON CERTAIN LOW PRINCIPAL AMOUNT EQUITY TRANSACTIONS.

Sanction: Civil and Administrative Penalt(ies) /Fine(s)

How it ended: Consent

Resolved: Sep 2, 2025

Allegations: WITHOUT ADMITTING OR DENYING ANY STATEMENTS OF FACTS OR VIOLATIONS OF LAW, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO REVIEW AND MONITOR THE CHARGING OF REASONABLE COMMISSIONS TO CUSTOMERS ON CERTAIN LOW PRINCIPAL AMOUNT EQUITY TRANSACTIONS.

Sanction: Civil and Administrative Penalt(ies) /Fine(s)

How it ended: Consent

Resolved: Sep 2, 2025

Allegations: WITHOUT ADMITTING OR DENYING ANY STATEMENTS OF FACTS OR VIOLATIONS OF LAW, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO REVIEW AND MONITOR THE CHARGING OF REASONABLE COMMISSIONS TO CUSTOMERS ON CERTAIN LOW PRINCIPAL AMOUNT EQUITY TRANSACTIONS.

Sanction: Civil and Administrative Penalt(ies) /Fine(s)

How it ended: Consent

Resolved: Aug 20, 2025