Finra Grants Stifel’s Request to Strike Arbitrators Based on Adverse Rulings

by Miriam Rozen

https://www.advisorhub.com/finra-grants-stifels-request-to-strike-arbitrators-based-on-adverse-rulings/

January 13, 2026

Stifel Financial, which is facing a string of claims tied to a former star broker in Miami, will no longer have to risk arguing its case in front of an arbitrator who previously ruled against it, according to a filing on Friday that investor advocates said could have broad implications for customers filing complaints against firms and advisors.

Stifel informed the court, where it is seeking to overturn a $133 million arbitration award, that  the Financial Industry Regulatory Authority granted its request to remove two candidates from a list of potential panelists in an upcoming arbitration. The regulator sided with Stifel, which argued that the arbitrators were biased because each had ruled against the firm in prior cases involving the broker, Chuck Roberts.

The Finra letter shows that industry’s self-regulatory organization has agreed with the basis of Stifel’s court argument that the chair of that panel demonstrated her bias by ruling against it in a prior case also involving Roberts.

Finra’s letter concluded: “It is reasonable to infer” that arbitrators “are biased or lack impartiality” when they have earlier awarded “substantial damages and attorneys’ fees” in cases that involve the same firms, financial advisor, supervisors and products.

Plaintiff lawyers said Finra’s move appears to be a break with prior policy and could make it easier for firms facing similar claims tied to a single product or broker. Courts have “long rejected” similar arguments that an arbitrator’s service in a separate case shows evident partiality or bias, said Michael C. Bixby, president of the Public Investors Arbitration Bar Association.

“This changed policy appears to be a one way street in favor of the financial industry, granting them additional arbitrator strikes to further stack the deck against customers,” said Bixby, who leads an eponymous firm in Pensacola, Florida. “Removal of an arbitrator for having ruled against a party in a prior case is simply not supported by the relevant legal authorities.”

Bixby said Finra’s “departure from the legal standards appears to be an unfortunate effort to appease the industry” and also “in conflict” with its “own prior actions.” He identified a 2014 case against Morgan Keegan & Co., in which Finra denied a similar motion to remove arbitrators.

“It is an outrageous position,” Adam Gana, the immediate past president of PIABA, said about the Finra letter.

“Any repeat player could systematically disqualify arbitrators simply because they once ruled for investors,” Gana added in an email. “Prior adverse rulings do not qualify” as such conflicts, Gana added.

A lawyer who frequently represents broker-dealers in arbitration cases at Finra, however, viewed the consequences of Finra’s letter as less dramatic and one-sided in its favorability since investors filing claims against firms could similarly seek to have arbitrators removed on the same basis.

“Any precedential value will be limited, but it will be offered to both sides,” Tom Lewis of Stevens & Lee in New Jersey said about the Finra letter.

The $133 million award against Stifel was “wild” and likely would prompt a court “to take a look at and determine if that is appropriate,” Lewis said.

An industry lawyer who spoke on condition of anonymity said he supported Stifel’s motion to remove the arbitrators. It is reasonable to assume that an arbitrator who has made a punitive damages finding involving the same firm and broker is already operating a mindset that makes it harder for that brokerage firm and broker to get a fair hearing, he said.

Finra’s move to eliminate the arbitrators from its list of prospective panelists means that Stifel will be able to preserve the strikes that it can use to narrow down the list of potential arbitrators. Under Finra rules, both sides receive three lists of potential panelists and can remove a set number from each for any reason.

The legal fallout from Roberts has continued for Stifel, which has faced, according to his BrokerCheck record, almost $75 million in claims, which have led to nearly $196 million in awards and settlements.

In mid-December, another investor seeking $1 million filed claims alleging breach of fiduciary duty, negligence, fraud, breach of contract, violation of the Securities Exchange Act and the Florida Securities and Investor Protection Act, according to the record.

Roberts accepted an industry ban in July rather than cooperate with Finra’s investigation. Two weeks prior to the ban, he voluntarily resigned from Stifel.

The Finra letter will likely be helpful to Stifel, Lewis said, since it will “effectively” give it “a clean slate,” meaning that “arbitrators who had nothing to do with prior awards” will serve on panels in pending cases.