Newspaper article THE JOURNAL RECORD

Stifel Agrees to Pay Penalty in Bond Case

Newspaper article THE JOURNAL RECORD

Stifel Agrees to Pay Penalty in Bond Case

Article excerpt

In the largest penalty ever levied by the Securities and Exchange Commission in a municipal bond case, Stifel, Nicolaus and Co. agreed Thursday to pay $1.4 million to settle charges it received improper payments from investment brokers.

The Stifel case is part of the SEC's anti-corruption crusade in the $1.2 trillion municipal bond market, where local governments go to finance public works projects such as building highways or schools.

The agency charged St. Louis-based Stifel failed to disclose to clients millions of dollars in payments its Oklahoma Public Finance Office received from investment brokers seeking to participate in 60 of Stifel's municipal bond deals.

Without admitting or denying the SEC's charges, Stifel agreed to repay $1.2 million in profits, including interest, that it received in the transactions. In addition, Stifel agreed to pay a $250,000 fine and agreed not to violate securities laws in the future.

Stifel's Oklahoma office, which the firm sold on May 25 to Capital West Securities Inc., was a dominant force in the Oklahoma municipal market, serving as an underwriter for almost $2 billion in municipals issued in the state between 1989 and 1993, the SEC said. Stifel had about 26 percent of the state's municipal bond underwriting business during that time.

Two executives with Stifel's Oklahoma City office resigned in September.

Wayne R. VonFeldt announced his resignation on Sept. 1. He was executive vice president and supervisor of securities offices in Oklahoma and Texas. He had been with Stifel since 1958.

Robert Cochran, who was executive vice president in charge of the company's Municipal Bond Underwriting Department, resigned in mid-September.

Cochran issued a statement in early November. Cochran said provided testimony to the Securities and Exchange Commission in connection with the May 1992 Oklahoma Turnpike Authority refinancing.

Cochran said he provided testimony to the SEC over a period of four days.

The SEC charged Stifel "defrauded" local government agencies by failing to disclose conflicts of interest in several municipal bond deals.

In one case, a 1989 municipal bond transaction involving the Oklahoma Turnpike Authority, Stifel was paid $150,000 from an unnamed broker and a provider of guaranteed investment contracts, which were purchased as part of the turnpike's financing package, the SEC said. …

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