Latest: Stifel advisor faces investor claims over structured notes

Chuck Roberts, a Florida-based advisor with 33 years of experience who has worked at Stifel since 2016, is facing eight investor claims amounting to US$23.5m in damages, according to his Finra BrokerCheck report.

The complaints all name Stifel as a respondent, not the advisor, and include claims of negligence, breach of fiduciary duty and unauthorised trading

The customer complaints claim breach of fiduciary duty, negligence, fraud, breach of contract and other allegations, with six filed in May and one each in June 2023, and last October.

The complaints all name Stifel as a respondent, not the advisor, and include claims of negligence, breach of fiduciary duty and unauthorised trading.

The managing director of investments at Stifel made the headlines locally in south Florida as a prominent buyer of real estate – the Stifel adviser bought a Miami Beach penthouse for US$13.8m in 2021, according to the South Florida Business Journal.

Some of the customers who have filed complaints over structured notes include the Bravura Insurance Company, Maercks Family Management Company, Noble Insurance and The Harbor Group of New York.

According to BrokerCheck, in 2010, Roberts lost one investor arbitration complaint, with US$202,000 in damages, stemming from alleged unsuitable and unauthorised trades. He was also suspended for four weeks and fined US$40,000 for allegedly breaking industry rules about opening client accounts. Roberts was registered with Morgan Stanley at the time.

Click in the link to read the Stifel advisor BrokerCheck report.

Eurex to launch daily options

Eurex has announced its plan to expand its equity index product suite by listing daily options on the Eurostoxx 50 Index which will start trading on 28 August 2023.

The new options will be offered with expirations on the next five trading days. In contrast to existing Eurostoxx 50 Index Options (OESX), the new contracts will be settled end-of-day. This will be based on the index closing price which is calculated at 17:30 CET compared to the intra-day expiry at 12:00 CET in the already listed OESX.

The launch responds to increasing demand from institutional investors for options with short-term expiries as investors seek to react quickly and precisely to specific market events, according to Eurex.

The new Eurostoxx 50 Index EoD Options (OEXP) will offer month-end expirations in addition to daily expirations. These will be available for the next three consecutive months. Four Liquidity providers have committed to provide quotes for this new offering as of trading day one.

Randolf Roth (above right), member of the Eurex executive board, said: ‘Particularly against the backdrop of increasingly volatile markets, Daily Options are another innovative solution for the professional market to efficiently manage exposures in a regulated and transparent market environment.’

In July nearly 19 million Eurostoxx 50 Index Options contracts and more than 15 million Eurostoxx 50 Index Futures contracts were traded at Eurex.

Solactive, Evaluate partner in first co-branded pharma index

Solactive is leveraging its open architecture approach to partner with Evaluate, a pharmaceutical solutions provider owned by Norstella company, to launch the Solactive Evaluate Global Pharma Index.

The Solactive Evaluate Global Pharma Index represents securities with potential future revenues in the pharmaceutical industry. To be eligible for inclusion in the index, a company’s total estimated future five-year revenues must exceed US$1m and be derived from products and services in the several therapeutic areas.

The partnership aims at offering access to the pharmaceutical industry which is expected to experience substantial growth in the coming years on the back of rapid advancements in medical research, technology, and increasing global demand for healthcare.

‘This collaboration highlights Solactive‘s open architecture approach and Evaluate’s expertise in pharmaceutical insight, enabling us to leverage their knowledge and provide an index with a comprehensive representation of securities in the pharmaceutical industry,’ said Timo Pfeiffer (above right), chief markets officer at Solactive.

‘By combining the capabilities and expertise of Evaluate and Solactive, this new index will enable the investment and trading community to benchmark key areas of growth, emerging pharmaceutical technologies, and clinical innovations that will enable them to make effective investment decisions,’ added Kevin Morgan, chief data operations officer at Evaluate.

SEC aims at predictive data analytics used by broker-dealers, advisers

The Securities and Exchange Commission (SEC) has proposed new rules requiring broker-dealers and investment advisers to take certain steps to address conflicts of interest associated with their use of predictive data analytics and similar technologies to interact with investors to prevent firms from placing their interests ahead of investors’ interests.

‘Today’s predictive data analytics models provide an increasing ability to make predictions about each of us as individuals,’ said SEC Chair Gary Gensler (right). ‘This raises possibilities that conflicts may arise to the extent that advisers or brokers are optimizing to place their interests ahead of their investors’ interests. When offering advice or recommendations, firms are obligated to eliminate or otherwise address any conflicts of interest and not put their own interests ahead of their investors’ interests.’

The use by broker-dealers and investment advisers of technologies to optimise for, predict, guide, forecast, or direct investment-related behaviours or outcomes has accelerated. Use of such technologies can be beneficial to investors in providing greater market access, efficiency, and returns.

Given the scalability of these technologies and the potential for firms to reach a broad audience at a rapid speed, any resulting conflicts of interest could cause harm to investors in a more pronounced fashion and on a broader scale than previously possible.

Under the new rules, firms will be required to eliminate, or neutralise the effect of, any such conflicts, but firms would be permitted to employ tools that they believe would address these risks and that are specific to the particular technology they use, consistent with the proposal.

New study finds conflict between green and ESG portfolio objectives

A new study from Scientific Beta shows that the successive growth of ESG and climate investing has led practitioners to promote strategies that aim to fulfil both higher ESG scores and lower carbon emissions, without considering the potential trade-off between these two dimensions.

According to the Green Dilution: How ESG Scores Conflict with Climate Investing study green dilution is pervasive, regardless of which ESG scores are targeted as objectives, substantial, with an average of 92% across portfolios, and robust across several alternative specifications.

A 92% green dilution means that 92% of the carbon intensity reduction investors could have reached by solely weighting stocks to minimise carbon intensity is lost when adding ESG scores as a partial weight determinant. Only 8% of the carbon reduction objective survived the inclusion of ESG scores in portfolio weighting schemes.

Overall, the study provides clear evidence against the quantitative mixing of ESG and carbon scores in equity portfolio weighting schemes, which comes at great carbon cost for green investors. Conversely, the study provides evidence in favour of the exclusionary approach to ESG objectives, to best accommodate multiple non-financial and unrelated objectives.

'The carbon intensity reduction of green portfolios can effectively be cancelled out by adding ESG objectives,’ said Felix Goltz (above right), co-author, and research director at Scientific Beta.

‘On average, social and governance scores more than completely reversed the carbon reduction objective. If you add more unrelated criteria, you are not going to perform well on all of them, so you have to think about your priorities. By adding too many you are losing the focus. If you are interested in reducing the carbon intensity of your portfolio, you are going to get that only by focusing on the carbon intensity, otherwise you are very quickly going to be getting green dilution.’

Click in the link to access the Scientific Beta study.

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