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A Financial Industry Regulatory Authority arbitration panel has ordered Stifel, Nicolaus & Co. Inc. to pay $7 million in attorney’s fees to a group of former Stifel advisers after rejecting Stifel’s claim that the advisers raided the company’s 96th Street office in Indianapolis two years ago to set up a new financial firm of their own.
The FINRA panel’s decision, issued Friday, resolves the claim that St. Louis-based Stifel filed in February 2023 against James Knall, Thomas Pence, Jeffrey Cohen, Ronald LeBlanc, Eduardo Aguirre and Michael Hall. Stifel’s FINRA claim against Aguirre and Hall was settled last month.
Knall, Pence and Cohen are former managing directors of St. Louis-based Stifel’s 96th Street office, which was also known as the KCP Group. The three are now senior partners at Indianapolis-based Sapient Capital LLC.
LeBlanc, who had been the chief operating officer at Stifel’s 96th Street office, is now a managing director at Sapient.
In its FINRA claim, Stifel alleged that the respondents had “spent months planning and orchestrating a raid” on its 96th Street office with the intent of moving all of their clients to the new firm they had formed, Sapient Capital. The six also recruited Stifel’s 96th Street staff to follow them to Sapient, Stifel alleged.
In response, the respondents filed a counterclaim of their own, alleging among other things that Stifel had harmed Sapient’s reputation and that Stifel had put its own financial interest above clients’ best interests by making it difficult for clients to move their assets to Sapient.
Stifel had asked the FINRA panel to award it more than $44 million in damages. The respondents had asked for more than $60 million in assorted damages.
The three-person FINRA arbitration panel unanimously denied Stifel’s claim and ordered the firm to pay $7 million to cover attorneys fees for Knall, Pence, Cohen and LeBlanc.
The panel also denied the respondents’ counterclaim.
Attorney Wayne Turner of Hoover Hull Turner LLP, which is representing the respondents in the FINRA case, said via email, “We believe this outcome reflects the merits of the case, and we are grateful for the diligence of the FINRA panel.”
The resolution of the FINRA case does not affect a similar case that Stifel has filed against Sapient Capital in U.S. District Court in the Southern District of Indiana.
Stifel originally filed its lawsuit against Sapient Capital LLC and Sapient Capital Founders LLC in February 2023 in U.S. District Court in the Eastern District of Missouri. That case was dismissed in March 2024 for lack of jurisdiction.
Stifel refiled the case 10 days later in U.S. District Court in the Southern District of Indiana. That case, which is still pending, names Sapient Capital, Sapient Capital Founders, Sapient Capital Holdings LP and Lee Equity Partners LLC. Lee Equity Partners is an investor in Sapient, the lawsuit alleges.
According to a regulatory form filed with the U.S. Securities and Exchange Commission, as of Dec. 31, Sapient had $11.4 billion in assets under management.
IBJ left a phone message with St. Louis law firm Dowd Bennett LLP, which is representing Stifel in its pending legal case. The firm had not responded as of IBJ’s publication deadline.
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