Stifel Stiffed In Customer Dispute

October 2, 2013

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in September 2012, Claimant DiMercurio asserted failure to supervise; unauthorized trading; and lack of due diligence and/or churning in connection with her contentions that Respondent Stifel, Nicolaus & Company, Inc. had failed to supervise its financial advisor Harrison. Claimant alleged that unnamed party Harrison had 
  • directed Claimant to write personal checks to him for personal loans;
  • excessively traded her account in order to earn commissions; and 
  • without her knowledge, sold her shares of Anheuser Busch stock. 
Claimant sought $66,276.85 in compensatory damages and $22,000 in attorneys' fees plus interest and costs. In the Matter of the FINRA Arbitration Between Carmella M. DiMercurio, Claimant, vs. Stifel, Nicolaus & Company, Inc., Respondent (FINRA Arbitration 12-03292, September 24, 2013)

Respondent Stifel Nicolaus generally denied the allegations and asserted affirmative defenses.

The sole FINRA Arbitrator found Respondent Stifel, Nicolaus liable and ordered it to pay to Claimant,
  • $45,143.60 in compensatory damages; 
  • $17,132.25 in interest; and 
  • $225.00 in costs as reimbursement of non-refundable portion of the filing fee

Bill Singer's Comment

Yeah, I know -- Bill, today's blog had about as much substance as cotton candy. What the hell was that all about, huh?  

To which I would say, ahh, Grasshopper (or maybe I would call you Young Skywalker -- all sort of depends how I'm feeling when I get up in the morning and the extent of my nostalgia for old TV and movie heroes).  So, where was I?  Oh, yeah, Grasshopper, sit by my side and let me teach you of the mysteries of the regulatory universe.  Ummm . . . would you please not sit so close. Move over a bit. Farther. Okay, that's better.

FINRA regulatory cases are like an artichoke. You must pull off the leaves. Except if there is a lot of olive oil and bread crumb on the artichoke, then you want to have a wet towel or bowl of lemon water around to clean off your fingers because it gets a bit messy. Now, with clean fingers, pick up each leaf and grate your teeth on the little bit of edible crap that's on the leaf and make sure you have a big bowl or something to put the leftovers in, which, frankly, is a big pain to go through for the little tidbits on the leaves that are now stuck between your teeth. In fact, maybe you wanna put some dental floss on the table? As you're making your way through outer leaves of the artichoke you come to the heart, which if someone hasn't properly cleaned it, you're going to choke and gag on the little purple hairs, which is likely why it's called a 'choke. Of course, assuming that you have finally made your way into the tasty artichoke heart, you have, what? -- maybe two three bites of something that you could have just as easily bought in a can without all the outer stuff.

And that is why FINRA regulatory cases are like artichokes.

Do you understand Grasshopper?  You do? Really?  Wow, that's impressive because I was just double talkin' and all but, hey, if you found something deep there, go for it.

Anyway, back to outer leaves and hearts and all that deep thought.  If you just read the arbitration decision, you would never have found the hidden heart of this case.  Thanks to Bill Singer's (that's me) selfless effort to delve into the hidden mysteries of FINRA arbitrations, I uncovered some fascinating aspects of the case that were not disclosed in the arbitration Decision.

According to online FINRA documents as of October 2, 2013, Stifel Nicolau discharged Neil Rolla Harrison on October 23, 2008, based upon the allegation:


In its disclosure summary to FINRA, the member firm asserted that Harrison had requested and accepted personal loans from clients.

Further online FINRA documents alleged that Harrison was previously discharged on October 7, 2005, by prior employer A.G.Edwards & Sons, Inc. based upon an allegation that he had:


For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Neil R. Harrison submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Neil R. Harrison, Respondent (AWC 2008015617301, January 27, 2010).

Harrison was first registered in 1992 and in October 2005 was employed at Stife until his October 2008 discharge. The AWC asserts that Harison had no prior relevant disciplinary history.

The AWC asserts that while registered with Stifel, Harrison solicited funds from at least five customers, two of whom were over the age of eighty. Though he represented to the customers that he would invest their money in investments, such as the gold market and commodities futures, Harrison used the customers' funds, approximately $85,000, for his personal use.

In June 2009, Harrison pled guilty to mail fraud.

The AWC asserts that the above conduct constituted violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and NASD Conduct Rules 2110,2120 and 2330.

Additionally, Harrison failed to respond to FINRA 8210 requests for information and documentation, in violation of FINRA Conduct Rule 2010 and Procedural Rule 8210.

In accordance with the terms of the AWC, FINRA imposed upon Harrison a Bar from association with any FINRA member in any capacity.