Indiana Securities Division Charges Stifel, Nicolaus & Company with Violations of the Indiana Securities Act in Connection with Auction Rate Securities Sales

October 1, 2009

Filing against St. Louis based securities broker-dealer announced in coordination with Colorado Division of Securities; $54 million of Indiana investments frozen

(Indianapolis) – Indiana Secretary of State Todd Rokita announced today that an investigation by his Indiana Securities Division resulted in the filing of an administrative complaint alleging securities fraud, failure to properly supervise and train sales people and unsuitability against securities broker-dealer Stifel, Nicolaus & Company. The complaint comes the same day similar action is being taken by the Colorado Division of Securities, alleges that Stifel, Nicolaus & Company failed to disclose risks associated with the sale of auction rate securities to Indiana investors. 

“Today, we are holding Stifel, Nicolaus & Company accountable for putting Indiana investors at unnecessary risk,” said Secretary Rokita. “This action sends a strong message that our state will not tolerate unethical and unlawful behavior and that my office will hold the securities industry accountable for any violations of the securities laws of Indiana.”

Although marketed and sold to investors as safe, liquid and cash-like investments, auction rate securities are actually long-term investments subject to a complex auction process that collapsed in early 2008, leading to illiquidity – meaning investors could no longer access their invested funds. As a result of the failure of the auction rate securities market, $54 million invested by Indiana residents was frozen – the highest amount of illiquid auction rate securities funds purchased from Stifel, Nicolaus & Company of any state. 

Also today, a similar complaint was filed against Stifel, Nicolaus & Company by investigators with the Colorado Division of Securities. The Indiana Securities Division and the Colorado Division of Securities worked together and within a multistate task force of state regulators formed by the North American Securities Administrators Association (NASAA) to develop evidence of the company’s alleged securities violations.

“This case demonstrates the strengths of state securities regulators across our nation.  We are quick to respond, innovative and aggressive,” said Secretary Rokita. “At a time when Congress is considering how to reform the nation’s financial services regulatory system, this case shows that investors deserve the continued strong protections provided by state securities regulators.”

"We appreciate the hard work and dedication of the Colorado and Indiana securities divisions to ensure that investors harmed by auction rate securities are provided relief," said Denise Voigt Crawford, President of NASAA and Texas Securities Commissioner.

The Indiana complaint is filed with the Indiana Securities Commissioner and could result in a fine of $10,000 per violation of the Indiana Securities Act, in addition to restitution for the investors’ funds frozen in the failed auction rate securities market.

Media Contact: Jim Gavin, 317.233.8655,