Don’t Let Investment Misconduct Go Unchallenged—$132M Case Shows What’s Possible

In March 2025, Stifel Nicolaus & Co. was ordered by a three person FINRA Arbitration Panel to pay a family of customer investors over $132 million related to overwhelming losses caused by misrepresentations surrounding structured note investments. The extraordinary award includes almost $80 million in punitive damages and over $25 million in attorney fees. Although the arbitration panel declined to provide a reasoned award, public reporting indicates that the broker at issue did not understand and failed to disclose risks associated with the investments to the customers and also utilized “unsupervised, off-channel communications” in recommending the investments. If your broker or advisor recommended an investment in structured notes, without fully disclosing the features/risks and you experienced financial loss, please contact our firm for a complimentary case evaluation.

Structured notes are hybrid securities that come in many different forms but typically have a debt component and derivative component. The debt component represents the larger portion of the investment and is represented to provides principal protection, although, in reality, investors in most structured note products risk losing their entire investment. The derivative portion of the investment is intended to amplify the return of the overall investment. This is usually achieved by allocating a portion of the investment amount to an underlying asset (i.e., stock, index or asset class), while the derivative portion of the investment is meant to increase returns, this portion can also dramatically increase losses, making structured notes appropriate for only the most sophisticated investors with high-risk tolerances.  Even then, these highly volatile products should represent only a small portion of most individual investor portfolios.

Although structured notes can offer investors considerable returns, these investments often come with undisclosed risks. First and foremost, structured notes are often extremely complex products with highly customizable features. Also, structured notes are typically sold by institutions, so they experience higher rates of default risk compared to traditional bonds or equity. The non-uniform nature of structured note terms has also made it difficult for secondary market makers to create liquidity. Hence, the issuers are often the only avenue for repurchase and, as a result, investors should expect (and may be forced) to hold the investments until maturity.

If your financial professional recommended an investment in a structured note but did not fully disclose the unique features and risks of associated with the complex products, please contact Colling Gilbert Wright, PLLC for a complimentary case evaluation. Over the past 20 years, we have successfully litigated and resolved hundreds of structured note and other alternative investment related claims.