Stifel Nicolaus & Company - Texas Securities Board Consent Order

TRAVIS J. ILES SECURITIES COMMI SSIONER CRISTI RAMÓN OCHOA DEPUTY SECURITIES COMMI SSIONER Mail: P.O. B OX 1316 7 AUSTIN, TEXAS 78711 - 3167 Phone: (512) 30 5 - 83 00 Facsimil e: (51 2) 305 - 8310 Texas S tate Securities Board 208 E. 1 0th Str eet, 5t h Floo r Austin, Texas 78701 - 2407 www.ssb.texas. gov E. WALLY KINNEY CHAIR ROBERT BELT MEMBER MELISSA TYROCH MEMBER EJIKE E. OKPA II MEMBER DAVID B. M ONTGOME RY MEMBER IN THE MATTE R OF THE DEALER § REGISTRA T ION OF § Order No. LID - 25 - CAF - 04 STIFEL, NICO LAUS & COM PANY, I NC. § I. CONSENT ORDER This C onsent Order (the “ Order ”) i s enter ed into by t he Tex as St ate Secur ities B oar d (“TSSB”) w ith Stifel, Nic olaus & Compa ny, Inc. (“ Stifel ”) w ith res pec t to a coordi nate d investi gation led by seven jurisdiction s, includ in g Alab ama, Io wa, Mass achusett s, Miss ouri, Mont ana, T exas, and Was hington (the “Multi - stat e Gro up”) into wh ether Stifel engaged i n acts or pra ctices that vi olated the Texas Securiti es Act, Tex. Gov’ t Code §§ 4001.00 1 - 4008. 105 (t he “ Tex as Secur ities Act”), a nd th e rule s and reg ulati ons promulgat ed t hereun der, Texas State Securi ties B oard R ules, 7 Tex. A dmin. Code §§ 101.1 - 139.27 (the “Board Rules ”). As the r esul t of the in vesti gation, the M ulti - state Grou p concl uded t hat St ifel cha rged unreas onable c ommis sion s on a pproximatel y 45, 352 equity tr ansactions n ationwide ov er a five - year period, total ing over $885, 480.13. Stifel neither a dmit s no r den ies the fac ts set forth i n Secti on V and the viol ations of law set forth in Sectio n V I below, and cons ent s to the entry of this Or der by th e TSSB, thereby settling t he above - ca ptioned mat ter wit h prej udice. II. Jurisdic tion 1. The TSS B has juris diction over matters r elatin g to secur ities purs uant t o the Texas Securiti es Act and the Administr ativ e Proce dure Act, T ex. Gov’ t Code Ann. §§ 2001.00 1 - 2001. 903. 2. This Order is ent ered in ac cord ance wi th § 4007. 105(a) (13)(B) and § 4007.10 6(a)(3) of the Texas Securi ties Act a nd § 115.10 (a) of the Board Rules. Stifel elects t o permanentl y waive a ny rights to a hear ing and any other pr ocedural rights gr anted by the T exas Securi ties Ac t or the Admi nistrative Pr ocedure Ac t.

Consent Orde r/ Stifel, Nicolaus & C ompany, I nc. /Page 2 3. The ac ts and practi ces that are the subj ect of TSSB’s invest igati on occur red while Stifel was regist ered wi th the Securiti es Commis sioner of T exa s (“Securiti es Commiss ioner”) as a d ealer in Texas. III. RELEVANT TIME PERIOD 4. Except as otherwis e expres sly st ated, the conduct d escribed he rein occurred during the a pproxi m ate time period of May 1, 2020, t o Apr il 30, 2025 (t he “Relev ant Time Per iod”). IV. RESPONDE NT 5. Stifel is a broker - dealer registered in T exas with a mai n address of 501 N orth Broadway, St. Louis, Mi ssouri. Stifel is identi fied by Financi al Ind ustry Regul atory Authority (“FINRA”) CRD No. 793. V. STA TEMEN T OF FAC TS Stifel ’s Minimum Commissi on Practices for Certain Equity T ra nsaction s Failed t o Ensure Transa ction s Were Ex ecuted at a F air and Reaso nable Price 6. D uri ng the Releva nt Time Period, Stifel cha rged co mmissio ns to thous ands of retail brokera ge customers on equity tra nsactions in l ow pri ncipal amount transacti ons. 7. Duri ng the R elevant Time Period, Stif el charged a minimum co mmissi on of fort y dollars ($40.00) for c ertai n equity buy and s ell t ransacti ons (t he “Mini m um Equity Commiss ion”) plus a f ive dollar ($5.00) trans actio n fee appli ed t o secondar y transacti ons. 8. Stifel’s fee s chedul e notes that th e m axi mum commiss ion shall n ot exceed five percent (5%) of t he p rinci pal unl ess the commissio n amou nt is les s than f ort y dollars ($40.00). 9. Stifel’s poli cies and pr ocedures noted t hat it should g enerally char ge commissi ons less than five percent (5%) of the pr incipal val ue of th e transactio n, “taking in to consider ation t he relevant ci rcums tances, including mar ket condi tions, the expense i nvol ved in ex ecuting th e order and t he value o f any servi ce render ed.” 10. Stifel’s poli cies and p rocedures permitted managers to adjust t he commi ssion amount t o ens ure co mmissi ons were fair and r easonabl e. 11. The Boar d Rules pr ohibit Stifel from c hargi ng unreason able commissio ns for servi ces perfor med. 12. FINRA Rul e 2121 S upplementar y Material.01 (R ule 2121.01) sets a gui deline of five perc ent for deter mining whet her a commiss ion i s unfai r or unreas onable.

Consent Orde r/ Stifel, Nicolaus & C ompany, I nc. /Page 3 However, the “ 5% Pol icy” is a guid e, not a r ule. A commiss ion p attern of fiv e percent or ev en less may be consid ered un fair or unreas onable. 13. During the Relev ant Time Per iod, Stifel ex ecuted 1585 equity tr ansactions in Texas, which includ ed an unre asonable com mission for servi ces performed (i.e. in excess o f 5% of the pr incipal tra de amoun t) totaling $31,280.52. 14. Numerous equity tran sactions execut ed by Stifel i ncluded a c ommi ssion wel l in excess o f 5% of the pr incipal valu e of th e transacti on. Stifel Did Not Reasonably Superv ise Transactions Which Applied the Minimum Equity Commis sion 15. Stifel did not reasona bly super vise transac tions which ap plied the Mi nimum Equit y Commiss ion c harge to ensure that Stifel char ged its cus tomers a r eason able commission. 16. Stifel’s su pervisor y systems i ncluded an al ert where the co mmission am ount on an equity tr ansacti on exceed ed five percent (5%). 17. Stife l ’s polici es and proc edures contem plate d manual adjust m ent o f commissions based on cer tain f actors whi ch w ould d etermi ne whe ther the c ommission w as reason able. 18. However, Stifel ’s poli cies a nd proc edures provided that “a tr ansaction w hich involves a small amount of money may war rant a hi gher percentag e sales credit to cover the value of services r endered.” 19. Stifel’s surveil lance pol icies failed to r easona bly detect and corr ect unreasona ble commiss ion char ges. 20. As a result, Sti fel fai led to adequat ely supervi se low principal equity transact ions where th e Minimum Eq uity Com m issi on was i n excess of five percen t (5%). VI. VIOLATIONS OF LA W 21. Section 115. 10(a) o f th e Board Rules require s dealers to est ablish, mai ntain, and enforce a syste m to s upervise the acti vitie s of its agents t hat is reason ably designed to achieve c ompliance wi th t he Texas Sec urities Act, the Board Rules, and all appli cable s ecur ities l aws and r egulations. 22. Stifel ’ s ac ts and practi ces, as d escri bed abov e, cons titute a v iolat ion of § 115.10 (a) of the B oard Rules. 23. Pursua nt to § 4007.1 05(a)(13) (B) of the T exa s Securities Act, Stifel ’s viol ations of § 1 15.10 (a) of t he Board Rul es cons titute a bas is for the issuanc e of a n Order repriman ding Stifel.

Consent Orde r/ Stifel, Nicolaus & C ompany, I nc. /Page 4 24. Pursua nt to § 4 007.1 06(a) (3) of th e Texas Sec urities Act, Stifel ’s vi olations of § 115.10 (a) of t he Board Rul es als o co nstitu te a basis f or the asse ssment of a n adminis trativ e fine. VII. ORDER IT IS HEREBY ORDERED: A. Stifel s hall perma nentl y cease and desist from con duct i n viol ation of § 115.10 (a) of t he Board Rul es, as des crib ed herein; B. Stifel is repri manded by the T SSB; C. Stifel s hall prov ide r esti tution in an amount of no l ess than $ 3 1,280. 52 represen ting the port ion of the commissi on on c ertain low principal equity transacti ons that exce eded five percen t (5%) of the pri ncipal trade amount during t he Relevant T ime Per iod to t he affected Tex as custo mers set fort h in Exhibi t A, plus inter est in the amount of six perc ent (6%) fro m the date of the tr ansacti on t o May 21, 2025. Stifel agree s to provide restitution with in sixty (60) days of ex ecuti on of t his Order; D. Restitut ion shal l be in the for m of a dol lar credit to curren t customer accounts, or a c heck f or al l former c ustomers or curr ent cus tomers w ho are entitle d to restit ution as a result of transac tions invol ving an individual retir ement acc ount; E. Stifel s hall pr ovide a notic e of restit ution to customers on t erms n ot unaccepta ble to the Mul ti - state Group (“Notice Lett er”) for use by all partici pating jurisdi ctions. T he N otice Letter shal l be sent at le ast seven (7) days pri or to the di stributio n of any restituti on. Withi n forty - five (45) days of the mail ing of th e Notice Let ter, Stif el shall pro vide the TSSB with a list of all Texas resident s for w hom Stifel recei ves a Notice Letter as ret urned to sender or otherwi se undeliv erable (“Undeliver able Texas Resi dent”). To the extent the TSSB has acces s to differe nt addr ess informati on, Stifel s hall mail a second N otice L etter to each Und eliver able Texas R esid ent within th irty (30) days of t he TSSB such dif ferent addres s; F. Within forty - five (45) days of mailing of the Not ice Let ter, S tifel sh all prepare, and sub mit to the TSSB a repor t detailing the restitut ion pai d pursuant t o the Order, w hich shall include d ates, amo unts, and metho ds of the transfer of funds for all restit ution payments. G. Stifel s hall pay an ad ministrative fine in the amount of $ 2 0,0 00.00 a nd $10,000.00 in i nvesti gation costs for a total paym ent of $30,0 00.00 to t he TSSB within fif teen (15) days fol lowing the dat e of entry of the Order. Payment s hall be: (1) mad e by United St ates post al mon ey order, c ertified check, b ank cas hier’s check, b ank money or der, or w ire; (2) made payable to the “St ate of Tex as”; and (3) either hand - deli vered, mailed by F edEx or

Consent Orde r/ Stifel, Nicolaus & C ompany, I nc. /Page 5 UPS to 208 E ast 10 th Street, Room 6 10, Aust in, T exas 78701 - 2407, or wi red per TSSB instructions; H. Stifel s hall not clai m, a ssert, or apply for a tax deduction or tax credit w ith regard to any state, fe deral or local t ax for any amount s tha t Stifel s hall pay pursua nt to th e Ord er; I. Stifel s hall no t seek or accept, dir ectly or indirectly, rei mburse ment or indemnif icati on, includi ng, but not limit ed to, any pay ments made pu rsuant to any i nsuranc e poli cy, with reg ard to any am ount that Stifel sha ll pay pursua nt to th e Ord er; J. If Stif el is the subj ect of a volu ntary or i nvolunt ary bankruptc y peti tion under Title 11 of the U nited S tates Code w ithin thr ee hundr ed sixty - fi ve (365) days of the en try of t he Order, Stifel shal l provide wr itten notic e to t he TSSB with in five (5) days of the dat e of the petiti on. K. Any fine, penalty, and/ or money that Sti fel s hall pay in accor danc e with th e Order i s int ended by Stifel a nd the TSSB to be a con tempo rane ous exchange for new valu e given to Sti fel pur suant to 11 U.S.C. § 5 47(c) (1)(A) and is, in fac t, a subs tanti ally cont emporaneous exchang e pursuant to 11 U.S.C. § 5 47(c)(1)(B). L. Upon th e issuance of this Ord er by the TSSB, i f Stifel fails to materially comply wi th any of the terms se t forth in t he Order, the TSSB may instit ute an acti on to h ave the Order declare d null and void. Additi onally, aft er a fair hearing and t he issu ance o f an order fi nding th at Stifel h as not c omplied with the Order, the TSSB may m ove to have the O rder d eclared null and void, i n whole or in part, and r e - institute the as sociate d proceeding th at had been bro ught against Stifel; and M. For good c ause s hown, the TSSB may extend any of t he procedur al dates set for th above. Sti fel shall make any requests for extensions of the proced ural da tes set for th above in wr iting to the TSS B. VIII. WAIVER Stifel has wai ved (a) Stifel ’s ri ght to notic e and h earing in this matte r; (b) St ifel ’s ri gh t to appear and present evidence in this matt er; (c) Sti fel ’s ri ght to ap peal thi s Order; and (d) all oth er proc edural right s gran ted to th e Sti fel b y t he Texas Securi ties Act, and the Adminis trativ e Proc edure Ac t, Tex. Gov’ t Code A nn. §§ 2001. 001 - 2001.903. IX. NO DISQUALI FICATION This Or der waiv es an y disqualifica tion in the l aws of Texas, or rules or reg ulations thereund er, includin g any disquali fication fro m relying upo n the re gistration exemptio ns or safe harbor provis ions t o whi ch Stifel m ay be subject. T his Ord er is not i ntended to b e

Consent Orde r/ Stifel, Nicolaus & C ompany, I nc. /Page 6 a final order based upon vi olations of t he Texas Securiti es Act that pr ohibit fr audule nt, manipulati ve, or decep tive conduct. T his Order is not int ended to for m the basi s of any disquali ficati ons under Section 3(a)(39) of the Secur ities Exchange Act of 1934; or Rules 504(b)(3) and 50 6(d)(1) of Regul ation D, Rule 262(a) of R egulati on A and Rul e 503(a) of Regulatio n CF under the Securi ties Act of 1933. T his Order is not intended to form t he basis of disqualifica tion un der the FIN RA rules pr ohibit ing cont inua nce in membersh ip absent t he filing o f a MC - 400A applica tion or disquali ficati on under SRO rules pr ohibiti ng contin uance i n member ship. Thi s Order i s not i ntended to form a basis of a disquali ficat ion under 20 4(a)(2) of t he Uni form Secur ities Ac t of 1956 or Sectio n 412(d) of th e Uniform Securiti es Act of 2002. Exce pt in an action by the TSSB to enforce t he obligations of this Order, any acts perfor med or docu m ents ex ecuted in fur therance of thi s Order: (a) may not be de emed or used as an admission of, or evi dence of, the v alidity of any alleged wrongdoi ng, liability, or l ack of any w rongdoi ng or liabili ty; or (b) may not be deemed or used as an admission of; or evi dence of, a ny such all eged fault or omission of S tife l in any civi l, cr iminal, arbitr ation, or administr ative procee ding in a ny court, ad ministrativ e agency, or tribunal. SIGNED A ND ENTERED BY T HE S ECURITIES CO MMISSIONER this 19th d ay o f December, 2 02 5. ___ ___ ___ __ ___ _ ___ ___ TRAVIS J. ILES Securit ies Commissione r

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