FINRA Fines Stifel, Nicolaus & Co. for Inaccurate Investor Order Reports

The Financial Industry Regulatory Authority has censured and fined St. Louis-based Stifel, Nicolaus & Company Inc. $175,000 for publishing inaccurate and incomplete information in its quarterly order routing reports. According to a letter of acceptance, waiver, and consent, the firm also failed to have a reasonable supervisory system in place to ensure compliance with the rules.

FINRA found that Stifel violated Rule 606(a) of Regulation NMS and FINRA Rule 2010. This rule is designed to provide transparency into how broker-dealers handle and route customer orders with the specific purpose being to help investors understand how their brokerage firm handles their trades and whether the firm’s routing decisions are influenced by financial incentives from trading venues.

The rule mandates that firms publish quarterly reports showing where they send their customers’ non-directed orders, i.e., orders where the customer doesn’t specify a particular trading venue.

These reports must disclose:

• The top 10 venueswhere the firm routed the most orders;
• Any venue that received 5% or moreof the firm’s orders;
• Thepayments and fees exchanged with each of these venues, including any “payment for order flow” or profit-sharing relationships; and
• Adescription of the firm’s relationship with each venue, including any arrangements that might influence order routing decisions.

According to FINRA, Stifel’s violations occurred between January 2020 and April 2025 and were uncovered during a FINRA cycle examination in 2022. Its reports inaccurately stated that the firm received a net aggregate amount of zero for payments for order flow, profit-sharing, transaction fees, and rebates for nine different execution venues. In reality, the firm either paid fees or received rebates from these venues.

Also, according to FINRA’s review, Stifel failed to disclose the material aspects of its relationships with execution venues in 16 reports. In many instances, the firm either provided no information or gave incomplete descriptions, such as mentioning “certain rebates” without identifying the venues or describing the terms. In three reports, the firm only provided hyperlinks to venue pricing tiers instead of describing them, which is not compliant with the rule.

Further, in 11 reports, Stifel incorrectly identified three broker-dealers as execution venues, which is also a violation.

In addition to the reporting inaccuracies, Stifel was cited for failing to maintain an adequate supervisory system. The firm used a third-party vendor to prepare its reports but did not have a system in place to review the data provided to the vendor for accuracy or to verify the material aspects of its disclosures before publication. The firm’s written supervisory procedures lacked sufficient guidance on how to conduct these reviews.

By consenting to the findings without admitting or denying the allegations, Stifel has agreed to the sanctions, which include a censure and the $175,000 fine.

In past FINRA-Stifel, March 2024 news, AltsWire reported that the broker-dealer failed to establish, maintain, and enforce a supervisory system designed to comply with FINRA’s suitability rule pertaining to early rollovers of unit investment trusts, which led to Stifel’s inability to detect alleged misconduct and violation pf NASD Rule 3010 and FINRA Rules 3110 and 2010.

Stifel is a full-service brokerage firm with approximately 5,000 registered representatives and 490 branch offices.

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