Stifel must pay more than $100,000 after a firm adviser plunged an elderly couple’s savings into risky investments without permission, their lawyer says.
Branch manager Kyle Ratcliff steered June and Perry Burns’ retirement funds into oil and gas investments and Puerto Rican bonds, losing them “a substantial portion of their entire life savings,” according to their FINRA arbitration claim.
June Burns, an 81-year-old retired elementary school teacher, and her husband Perry, 87, who worked as a rancher and truck factory worker, accused Stifel of breach of fiduciary duty in a FINRA arbitration claim filed in December 2015. The filing also alleges unauthorized trading, negligence, unsuitable investments and other violations.
A FINRA arbitrator awarded the couple a full refund of their $79,709 in losses, plus interest and fees, in a decision made last week.
“This was all the money they had, and they put it with Stifel,” attorney Courtney Werning, who represented the couple, told On Wall Street. “It was extremely risky, and these people were risk-averse. There’s no way this stuff was suitable for them.”
A Stifel spokesman declined to comment, and a lawyer who represented the firm did not respond to a phone message and email. The company, in its own filings, denied the Burns' allegations and asked that the case be dismissed and expunged from FINRA records.
Ratcliff didn’t return a phone call and email on Wednesday. A woman who answered the phone in his Denton, Texas, office said he was out of the country and unavailable.
RETIREES WITH LIMITED RESOURCES
The Burnses, residents of Krum, a city about an hour northwest of Dallas, followed Ratcliff when he moved to Stifel from Wells Fargo in 2010, according to their filing.
In addition to their savings, they own a home worth $124,000, have less than $15,000 in their bank account and collect Social Security income, according to their arbitration claim. The couple’s gross income for 2014 was about $19,000, the document shows.
The couple stated their investment objective as “income” and their risk tolerance as “moderate,” according to the filing. Yet they wound up with investments “that looked nothing like what retirees with limited resources should have,” the document says.
Ratcliff bought over $40,000 in oil-and-gas stocks and shares of a fund investing in energy royalty trusts in May 2013, according to the claim. In April 2014, he purchased a $23,000 stake in an “illiquid, high-risk, closed-end Puerto Rican municipal bond fund,” the document says.
Months later, he picked up more shares in two oil-and-gas companies, according to the claim. He made all of the trades without the Burns’ consent, the filing says. By the end of Ratcliff’s trades, oil and gas equities comprised over half of the Burns’ portfolio, according to Werning.
Perry Burns asked his daughter to review the couple’s statements when their accounts began plummeting in value, according to the filing. She identified the problem and lodged a complaint with Stifel, but the company took no action, the claim says.
The Burnses transferred “what was left of their holdings” out of Stifel in November 2015, lodging the claim with FINRA the following month, according to the document. They asked for an expedited proceeding under a rule allowing one for elderly or seriously ill parties.
‘HAPPY WITH THE RESULT’
An arbitrator led five hearing sessions between the two sides in Dallas before awarding the Burnses full compensatory damages. Stifel must also pay the couple interest, attorney fees and other costs, running the overall penalty under the Feb. 9 ruling to more than $117,000.
When Werning notified the family, an excited relative rushed to a hospital where Perry Burns is bed-ridden in declining health to tell him the good news, Werning says.
“It was a full win for the Burnses,” she says. “We’re really happy with the result.”