Stifel Financial Corporation (NYSE: SF) Investor Securities Class Action Lawsuit 08/08/2008

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Company Name(s): 
Stifel Financial Corporation
Case Name: 
Stifel Financial Corporation Shareholder Class Action Lawsuit 08/08/2008
Case Status: 
Lawsuit Filed
Case Status: 
Case Dismissed
Affected Securities
NYSE: SF
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
08/08/2008
Class Period Begin: 
08/08/2003
Class Period End: 
02/13/2008
Court of Filing: 
U.S. District Court for the Eastern District of Missouri
Deadline To File for Lead: 
10/07/2008
Case Dismissed: 
07/02/2010
Summary: 

July 2, 2010 - The court denied the plaintiff's motion to award attorneys’ fees and costs and granted the defendants' motion to dismiss and dismissed the action with prejudice.

March 26, 2010 - The lead plaintiff filed a motion for an award of attorneys’ fees and costs and entry of judgment.

December 4, 2009 - Defendants filed a motion to dismiss.

November 18, 2009 - The court denied the defendants' motion to dismiss.

November 16, 2009 - The lead plaintiff filed a second amended consolidated complaint.

October 30, 2009 - The court granted the plaintiff leave to file a second amended consolidated complaint.

October 6, 2009 - The lead plaintiff filed a motion for leave to amend the consolidated complaint.

March 10, 2009 - Defendants filed a motion to dismiss.

January 9, 2009 - The lead plaintiff filed an amended consolidated complaint on behalf of investors who purchased SF common shares between August 8, 2003 and February 13, 2008. The lead plaintiff alleges that the defendants violated the Securities Exchange Act of 1934 by issuing false and misleading statements between August 8, 2003 and February 13, 2008.

November 17, 2008 - Lead plaintiff and lead counsel were appointed.

October 14, 2008 - Lead counsel motions were filed.

August 8, 2008 - An investor in shares of Stifel Financial Corporation (NYSE: SF) auction-rate securities filed a lawsuit in the U.S. District Court for the Eastern District of Missouri against Stifel Financial Corporation over alleged violations of Federal Securities Laws in connection with certain allegedly false and misleading statements made between June 11, 2003 and February 13, 2008.

According to the complaint the plaintiff charges Stifel Financial Corporation and its subsidiary Stifel Nicolaus and Company Inc with violations of the Securities Exchange Act of 1934 Sections 10(b) and 20(a) by deceiving investors about the investment characteristics of auction-rate securities and the auction market in which the securities are traded.

The lawsuit alleges that Stifel Financial Corporation failed to disclose the following material facts about the auction-rate securities it sold to the class: 1) The auction-rate securities were not cash alternatives like money market funds but were instead complex long-term financial instruments with 30-year maturity dates; 2) The auction-rate securities were only liquid at the time of the sale because Stifel Financial Corporation and other broker-dealers were artificially supporting and manipulating the market to maintain the appearance of liquidity and stability; 3) Stifel Financial Corporation and other broker-dealers routinely intervened in the auctions for their own benefit to set rates and to prevent all-hold auctions and failed auctions, and; 4) Stifel Financial Corporation continued to market auction-rate securities as liquid investments even after Stifel Financial Corporation and other broker-dealers determined that they would likely be withdrawing support for the periodic auctions and that a freeze of the auction rate securities market would result.

Auction-rate securities are preferred shares or debt instruments with rates that reset regularly, usually every week, in auctions overseen by the brokerage firms that originally sold them. The $300 billion market for the investments collapsed in February, 2008 and according to Barry Silbert, chief executive of Restricted Stock Partners in New York investors still hold more than $200 billion of them. Banks attracted thousands of investors to auction-rate securities in recent years by telling them that the securities were safe and liquid as Treasury bonds. When the market collapsed investors were unable to liquidate their auction rate securities. The lawsuit alleges that Stifel Financial Corporation failed to disclose the following material facts about the auction rate securities.

The lawsuit, filed on August 8, claims that, pursuant to uniform sales materials and top-down management directives, Stifel Financial Corporation offered and sold auction-rate securities to the public as highly liquid cash-management instruments and as suitable alternatives to money market mutual funds. On February 13, 2008, all of the major broker-dealers, including Stifel Financial Corporation, withdrew their support for the auctions. The suit claims that, as a result, investors have been unable to liquidate their auction-rate securities.