Stifel Financial has suffered another significant setback in Finra arbitration, marking a costly defeat for the firm.
A three-member arbitration panel dismissed Stifel’s claims of raiding and breach of contract against six Indianapolis-based advisors. In addition to rejecting the firm’s claims, the panel ordered Stifel to pay $7 million in legal fees to the advisors and cover arbitration hearing costs of $45,675, according to the arbitration award released last Friday.
A Stifel representative declined to comment on the ruling.
This decision follows another recent blow for Stifel, in which Finra arbitrators ordered the firm to pay approximately $133 million to four clients who accused a Stifel advisor of breaching fiduciary duty and engaging in misconduct in an unrelated case.
Stifel’s stock has declined by 9.2% this year, compared to a 3.3% drop in the S&P 500.
Wayne Turner, an attorney at Hoover Hull Turner who represented the advisors, welcomed the ruling. “The Finra arbitration panel unanimously ruled in favor of my clients, partners of Sapient Capital. This decision reflects the merits of the case, and we appreciate the panel’s diligence,” he said.
Stifel initiated the arbitration in February 2023 after the six advisors—James McLaughlin Knall, Thomas James Pence, Jeffrey Scott Cohen, Ronald Andrew LeBlanc, Eduardo Michael Aguirre, and Michael James Hall—departed to establish Sapient Capital, a registered investment advisory (RIA) firm.
Concurrently, Stifel filed a federal lawsuit in St. Louis, seeking a temporary restraining order against the team. The lawsuit alleged that the advisors abruptly resigned on February 17, 2023, and subsequently persuaded over 30 Stifel employees to join Sapient. According to the filing, LeBlanc emailed a Stifel employee to inform him of his resignation alongside 27 other employees.
Upon receiving LeBlanc’s email, the Stifel employee visited the Indianapolis NW office and reportedly found it deserted, with a stack of resignation letters left behind. Stifel claimed that the advisors’ departure significantly hampered its ability to serve clients.
The firm’s lawsuit noted that the office previously managed approximately 7,500 client accounts with $10 billion in assets. However, a federal judge dismissed the case in March 2024, citing a lack of jurisdiction.
In the arbitration, Stifel argued that the advisors had spent months orchestrating their departure with the intention of transferring their client base to Sapient. The firm sought over $50 million in damages from the advisors.
The advisors denied Stifel’s allegations, and after nearly 30 hearing sessions, the arbitrators ruled in their favor on March 14.
Sapient Capital now manages over $11 billion in assets, as per its most recent Form ADV filing with the Securities and Exchange Commission.
