Stifel Moves Up Plan to Repurchase All of Retail Clients' Auction Rate Securities

Stifel Financial Corp. has announced that its subsidiary Stifel Nicolaus & Company, Inc. will complete its repurchase of auction rate securities ("ARS") -- held at Stifel by the company's retail investors -- no later than December 2011, six months earlier than previously planned.

Eligible investors are those retail clients who bought ARS through Stifel before the collapse of the ARS market in early 2008 and continue to hold those ARS at Stifel, the Company noted in a release.

Stifel said that the accelerated repurchase plan is part of an agreement Stifel reached with state regulators in Missouri, Indiana, Colorado and other members of the North American Securities Administrators Association ("NASAA") Task Force regarding ARS. The settlement includes a $525,000 fine that will be shared by the states participating in the NASAA settlement. In addition, the settlement calls for payments of $250,000 to Missouri and $25,000 to Indiana for their costs of investigation, expenses and other payments.

The settlement also calls for Stifel to hire an independent consultant who will review the firm's supervisory and compliance policies and procedures solely for non-conventional investments.

Stifel completed its first repurchase of ARS as scheduled in June 2009. It will move up to next month a repurchase from eligible investors of the greater of 10 percent or $25,000 of eligible ARS and follow with similar repurchases next December and again in December 2011. That will exceed the initial target date for completing the voluntary repurchase program - June 2012 - by six months. A supplemental repurchase will be made of any ARS remaining after the one in December 2010 for eligible investors who held ARS totaling $150,000 or less as of January 1. Stifel will take an assignment of clients' actionable legal claims against the major ARS market participants for the amounts repurchased.

According to Company officials, all of Stifel's retail investors who bought ARS through Stifel prior to the collapse of the ARS market in early 2008 and continued to hold those ARS at Stifel are eligible to participate in the repurchase program. Employee accounts become eligible in the last phase of the plan.

"We are pleased to be able to accelerate and further enhance our voluntary plan to repurchase ARS that we started earlier this year and at the same time resolve all issues with NASAA. We especially appreciate the efforts of the Missouri Secretary of State and her staff for their willingness to work with us and create a solution that works well for all involved," Stifel Chairman and CEO Ronald J. Kruszewski said.

"Since the collapse of the ARS market, issuer redemptions and restructurings as well as Stifel's voluntary repurchase plan have resulted in significant liquidity for many of our clients, reducing retail client holdings by nearly 50 percent. This accelerated and enhanced plan will ultimately provide liquidity to 100 percent of our ARS retail clients, about 1,200 in number, who represent less than one-half of one percent of all Stifel retail accounts," Kruszewski said.

Stifel Financial Corp. is a financial services holding company headquartered in St. Louis.

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