Firm charged with defrauding school districts
MILWAUKEE — The federal Securities and Exchange Commission has charged a St. Louis brokerage firm and a former executive with defrauding five Wisconsin school districts by selling them risky investments funded mainly with borrowed money.
The SEC complaint against Stifel, Nicolaus & Co. and former Senior Vice President David Noack was filed in federal court in Milwaukee Wednesday.
The Kenosha, Kimberly, Waukesha, West Allis-West Milwaukee and Whitefish Bay districts set up the investments to help pay for health and pension benefits promised to retirees. The districts used a $165 million loan from a Dublin-based bank and $35 million in tax dollars for the investments, which lost nearly all their value during the global economic crisis. The districts sued Stifel, Nicolaus & Co. and the Royal Bank of Canada, which put the deals together.
Lawyers for both sides did not immediately return calls seeking comment.