Stifel, Nicolaus & Company, Incorporated and former broker Joseph Crespi (CRD# 1110919) were ordered to pay more than $3 million in fines and restitution to harmed investors who suffered investment losses; due to predatory sales practices. He was registered with Ameriprise Financial Services, LLC in Taunton, Massachusetts, from August to November 2022, when he was terminated regarding, “representative resigned after notification that he was suspended pending an internal review of his conduct related to acting outside the scope of his duties.”
Previously, he was registered with Stifel, Nicolaus & Company, Incorporated in the Private Client Group (PCG) divison in Taunton, Massachusetts, from 2018 to 2022. Before then, he was registered with Merrill Lynch, Pierce, Fenner & Smith Incorporated om Taunton, Massachusetts, from 2006 to 2018.
In May 2023, the office of Massachusetts Secretary of the Commonwealth ordered Stifel, Nicolaus & Company, Incorporated to pay a $2.5 million fine and $700,000 in restitution to customers who were charged more than 5% commissions on equity transactions. According to the announcement, the brokerage firm ignored “red flags that warned that elderly Massachusetts residents, non-profit organizations, and churches were being charged excessive and unauthorized fees, due to the actions” by Joseph Crespi. The investigation found that he subjected clients to predatory sales practices during several years, which led to him receiving higher commissions. Despite giving warnings, Stifel, Nicolaus & Company, Incorporated failed to discipline the broker or take action to correct his predatory behavior.
According to the consent order, “The Division’s investigations concluded that Stifel did not take timely action to address customer harm and did not ensure its agents were acting in the best interest of their customers. In particular, the Division uncovered a compliance system and supervisory program which did not take timely action to address red flags that elderly Massachusetts residents, a non-profit organization, and churches were being charged excessive, and in some instances, unauthorized fees.”
It was found that his performance was due to his active trading strategy, including in certain elderly client accounts. Additionally, the report identified “facts suggestive of unauthorized trading based on the number of trades executed within two minutes of other trades, suggesting that FRI (Joseph Crespi) had not spoken to clients to obtain authorization prior to submitting trade orders.”
The consent order reported: “Stifel also received information indicating that FRI may have engaged in unauthorized trades in client accounts.” A May 2020 internal compliance report indicated that the top 20 revenue generating accounts’ trades were related to investments in the accounts of clients with an average age of 76 years of age or older as well as accounts held by a church, a non-profit organization and elderly customers between the ages of 63-90 years of age. Additionally, these clients suffered unrealized losses of $820,000. Finally, the accounts underperformed the market, “Since January of 2019 FRI’s clients saw an overall return of only 3.43% despite the S&P 500 seeing a return of 21.14% in the same time period.”
The consent order further found that “Of the 74 accounts with an ROA above 2%, 63 accounts had portfolio turnover of at least 50%, 23 accounts had portfolio turnover over 100% and four accounts had portfolio turnover over 150%.”
The consent order reported that he was suspected of making unauthorized trades, including in the account of a deceased client.
The investigation also uncovered harm to customers companywide, including instances of employees using “personal cell phones to conduct business and distributing retail communications in violation of firm and regulatory requirements.”
Joseph Crespi was placed on heightened supervision after the findings of this report, but no disciplinary actions were taken during a three-year period.
Joseph Crespi Customer Complaints
He has been the subject of three customer complaints between 2001 and 2015, all of which were denied, according to his CRD report:
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Stifel, Nicolaus & Company, Incorporated may be liable for investment or other losses suffered by Joseph Crespi’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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