Stephens Inc.

Allegations: FINRA RULE 2010, NASD RULES 1021, 2110, 3010 - STEPHENS INC. FAILED TO REGISTER TWO PERSONS ACTING IN A SUPERVISORY CAPACITY WITH RESPECT TO THE FIRM'S INVESTMENT BANKING OR SECURITIES BUSINESS IN THE REGISTRATION CATEGORY APPROPRIATE TO THE FUNCTION TO BE PERFORMED AS A GENERAL SECURITIES PRINCIPAL. THE FIRM FAILED TO TIMELY REGISTER ITS HEAD OF EQUITY TRADING AS A GENERAL SECURITIES PRINCIPAL AND AN EXECUTIVE VICE PRESIDENT/HEAD OF INSTITUTIONAL SALES & TRADING. THE FIRM FAILED TO ENFORCE ITS WRITTEN SUPERVISORY PROCEDURES (WSPS)CONCERNING COMPLIANCE WITH FINRA'S REGISTRATION REQUIREMENTS AND FAILED TO ENSURE THAT PERSONNEL RECEIVED CORRECT GUIDANCE ON PRINCIPAL LICENSING REQUIREMENTS AND WERE APPROPRIATELY LICENSED. THE FIRM FAILED TO ENSURE THAT TRADING LIMITATIONS IMPOSED ON A FIRM TRADER WHO LACKED A LIMITED REPRESENTATIVE-EQUITY TRADER (SERIES 55) REGISTRATION WERE ADEQUATELY COMMUNICATED AND MONITORED. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, THE FIRM IS CENSURED, FINED $40,000 AND REQUIRED, WITHIN 60 DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC, TO REVIEW ITS SUPERVISORY SYSTEM AND PROCEDURES CONCERNING COMPLIANCE WITH APPLICABLE LAWS, REGULATIONS AND RULES REGARDING REGISTRATION PERTAINING TO FIRM PERSONNEL AND ENSURE THAT ANY INDIVIDUAL WHOSE FUNCTION RESULTED IN A PRINCIPAL LICENSING FAILURE DOES NOT CONTINUE TO ACT IN A PRINCIPAL CAPACITY UNLESS AND UNTIL SUCH INDIVIDUAL IS REGISTERED AS A GENERAL SECURITIES PRINCIPAL. NO LATER THAN 60 DAYS AFTER THE ACCEPTANCE OF THIS AWC BY THE NAC, A REGISTERED FIRM PRINCIPAL SHALL SUBMIT A SIGNED DATED LETTER TO FINRA PROVIDING A REPRESENTATION THAT THE FIRM HAS UNDERTAKEN A REVIEW AND THE STEPS THE FIRM HAS TAKEN TO ENSURE ALL OF ITS PERSONNEL ARE APPROPRIATELY REGISTERED AND THAT NONE OF THE INDIVIDUALS WHOSE FUNCTIONS RESULTED IN A PRINCIPAL LICENSING FAILURE WILL CONTINUE TO ACT IN A A PRINCIPAL CAPACITY UNLESS EACH RESPECTIVE INDIVIDUAL IS REGISTERED AS A GENERAL SECURITIES PRINCIPAL.

Allegations: SEC RULE 10B-10, FINRA RULE 7450 - STEPHENS INC. INCORRECTLY SUBMITTED TO THE ORDER AUDIT TRAIL SYSTEM (OATS)BOTH NEW ORDER AND COMBINED ORDER ROUTE REPORTS FOR ORDERS; INCORRECTLY SUBMITTED ONE OR MORE NEW ORDER REPORTS INSTEAD OF COMBINED ORDER ROUTES FOR ORDERS; SUBMITTED INCORRECT INFORMATION ON ROUTE REPORTS OR COMBINED ORDER ROUTE REPORTS FOR ORDERS (INCLUDING INCORRECT DESTINATION CODES AND INCORRECT OR OMITTED INFORMATION ON SENT TO FIELDS); FAILED TO SUBMIT ROUTE REPORTS FOR ORDERS; SUBMITTED DUPLICATE NEW ORDER REPORTS FOR ORDERS AND SUBMITTED UNNECESSARY ROUTE REPORTS FOR ORDERS. THE FIRM FAILED TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TO ITS CUSTOMER THAT THE TRANSACTION WAS EXECUTED AT AN AVERAGE PRICE, AND FAILED TO DISCLOSE ITS CORRECT CAPACITY IN THE TRANSACTION. THE FIRM PROVIDED WRITTEN NOTIFICATION TO ITS CUSTOMER THAT CONTAINED AN INCORRECT DISCLOSURE ABOUT ITS REMUNERATION IN TRANSACTIONS BY REFERRING TO ITS REMUNERATION AS A "COMMISSION" INSTEAD OF A "COMMISSION EQUIVALENT" OR " MARKUP/MARKDOWN" WHERE THE FIRM ACTED IN A PRINCIPAL OR RISKLESS PRINCIPAL CAPACITY. THE FIRM PROVIDED WRITTEN NOTIFICATION TO ITS CUSTOMER BY DISCLOSING TRANSACTIONS AS AVERAGE PRICE EXECUTIONS WHEN ITS USAGE DID NOT APPLY. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, THE FIRM IS CENSURED AND FINED $12,500. Summary: IT'S OVER 10 YEARS OLD AND NOT ADVISORY RELATED.

Allegations: FINRA RULE 2010, NASD RULE 3010 - STEPHENS INC. FAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM AND CONTROL PROCEDURES REASONABLY DESIGNED TO PREVENT ITS REPRESENTATIVES FROM ENGAGING IN FRAUDULENT POST-EXECUTION ALLOCATIONS OF BLOCK TRADES (CHERRY PICKING). WHILE THE FIRM REQUIRED ITS REPRESENTATIVES TO DESIGNATE THE ACCOUNT TO WHICH A BLOCK TRADE SHOULD BE ALLOCATED UPON ORDER ENTRY, THE FIRM FAILED TO HAVE IN PLACE ANY SYSTEM OR PROCEDURE THAT VERIFIED THAT THE REPRESENTATIVES HAD MADE THE REQUISITE DESIGNATIONS. THE FIRM'S ORDER ENTRY SYSTEM ACCEPTED ORDERS FOR BLOCK TRADING ACCOUNTS EVEN IF AN ACCOUNT WAS NOT DESIGNATED UPON ORDER ENTRY. THE FIRM DID NOT HAVE IN PLACE ADEQUATE SYSTEMS OR PROCEDURES DESIGNED TO MONITOR FOR OR DETECT A REPRESENTATIVE'S FAILURE TO ADHERE TO THE POLICY. THE FIRM DID NOT UTILIZE ANY EXCEPTION REPORTS TO DETECT IF REPRESENTATIVES HAD DESIGNATED A CUSTOMER AT THE TIME THEY ENTERED AN ORDER USING THEIR BLOCK TRADING ACCOUNT. THE FIRM'S ONLY BLOCK TRADING EXCEPTION REPORT WAS USED TO DETECT AND MONITOR BLOCK TRADES THAT HAD NOT BEEN ALLOCATED BY THE END OF THE TRADING DAY. THE FIRM DID NOT HAVE ANY CONTROLS TO DETECT A FORMER REPRESENTATIVE WHO USED HIS BLOCK TRADING ACCOUNT TO ALLOCATE FAVORABLE TRADES POST-EXECUTION TO FAVORED CUSTOMERS TO THE DETRIMENT OF A DISCRETIONARY CUSTOMER, WHOSE ACCOUNT THE REPRESENTATIVE DID NOT HAVE DISCRETION OVER. THE FIRM REPAID THE DISCRETIONARY CUSTOMER APPROXIMATELY $240,000 FOR DAMAGES RELATED TO THE REPRESENTATIVE'S CHERRY-PICKING SCHEME AND WHAT THE FIRM DETERMINED TO BE HIS UNAUTHORIZED TRADING. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, THE FIRM IS CENSURED AND FINED $55,000. Summary: IN OR AROUND DECEMBER, 2009, STEPHENS DISCOVERED THAT A REPRESENTATIVE WAS IMPROPERLY USING HIS BLOCK TRADING ACCOUNT TO ALLOCATE FAVORABLE TRADES POST-EXECUTION TO TWO OF HIS FAVORED NON-DISCRETIONARY CUSTOMERS TO THE DETRIMENT OF A DISCRETIONARY CUSTOMER WHOSE ACCOUNT WAS MANAGED BY ANOTHER REPRESENTATIVE OF THE FIRM; ONE FOR WHOM THE REPRESENTATIVE WORKED AS A SALES ASSISTANT. AN INTERNAL REVIEW OF THE REPRESENTATIVE'S TRADING ACTIVITY WAS THOROUGHLY CONDUCTED AND IT WAS DETERMINED THAT THE REPRESENTATIVE HAD ENGAGED IN CHERRY PICKING OVER A PERIOD OF SEVERAL MONTHS. UPON DISCOVERY OF THE FRAUDULENT ACTIVITY OF THE REPRESENTATIVE, HIS EMPLOYMENT WITH THE FIRM WAS TERMINATED. ADDITIONALLY, 1) STEPHENS SELF-REPORTED THE INAPPROPRIATE TRADING ACTIVITY TO FINRA; 2) STEPHENS AND THE REPRESENTATIVE REIMBURSED THE AFFECTED CUSTOMER FOR THE LOSSES THE CUSTOMER INCURRED; 3) STEPHENS REVISED ITS PROCEDURES TO ENABLE FIRM MONITORING OF BLOCK TRADING ACTIVITY TO DETECT SUCH ACTIVITY; AND 4) THE FIRM IMPLEMENTED A "HARD STOP" ON ITS ORDER ENTRY SYSTEM TO PREVENT THE ACCEPTANCE OF AN ORDER FROM A BLOCK ACCOUNT WITHOUT PROPER ACCOUNT DESIGNATION.

Allegations: FINRA RULES 2010, 6730, NASD RULE 3010: THE FIRM FAILED TO REPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE) THE CORRECT CONTRA-PARTY'S IDENTIFIER FOR SEVERAL S1 TRANSACTIONS IN TRACE-ELIGIBLE CORPORATE DEBT SECURITIES. IN ADDITION, THE FIRM FAILED TO REPORT TO TRACE SOME S1 TRANSACTIONS IN TRACE-ELIGIBLE CORPORATE DEBT SECURITIES THAT IT WAS REQUIRED TO REPORT. THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS AND REGULATIONS, AND THE RULES OF FINRA, CONCERNING TRACE REPORTING. SPECIFICALLY, THE FIRM'S SUPERVISORY SYSTEM DID NOT INCLUDE WRITTEN SUPERVISORY PROCEDURES PROVIDING FOR THE IDENTIFICATION OF THE PERSON(S) RESPONSIBLE FOR SUPERVISION WITH RESPECT TO THE APPLICABLE RULES, A STATEMENT OF THE SUPERVISORY STEP(S) TO BE TAKEN BY THE IDENTIFIED PERSON(S), A STATEMENT AS TO HOW OFTEN SUCH PERSON(S) SHOULD TAKE SUCH STEP(S), AND A STATEMENT AS TO HOW THE COMPLETION OF THE STEP(S) INCLUDED IN THE WRITTEN SUPERVISORY PROCEDURES SHOULD BE DOCUMENTED. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS, THEREFORE THE FIRM IS CENSURED AND FINED $10,000 (CONSISTING OF A FINE OF $5,000 FOR TRACE REPORTING VIOLATIONS AND $5,000 FOR THE SUPERVISION FINDINGS); AND AN UNDERTAKING TO REVISE ITS WRITTEN SUPERVISORY PROCEDURES WITH RESPECT TO ACHIEVING COMPLIANCE WITH THE APPLICABLE SECURITIES LAWS AND REGULATIONS, AND THE RULES OF FINRA, CONCERNING TRACE REPORTING. WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC, A REGISTERED PRINCIPAL OF THE RESPONDENT SHALL SUBMIT TO FINRA, A SIGNED, DATED LETTER, OR AN E-MAIL FROM A WORK-RELATED ACCOUNT OF THE REGISTERED PRINCIPAL PROVIDING THE FOLLOWING INFORMATION: (1) A REFERENCE TO THIS MATTER; (2) A REPRESENTATION THAT THE FIRM HAS REVISED ITS WRITTEN SUPERVISORY PROCEDURES TO ADDRESS THE DEFICIENCIES; AND, (3) THE DATE THE REVISED PROCEDURES WERE IMPLEMENTED.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT DISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLE ORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASS A SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALES CHARGE (ELIGIBLE CUSTOMERS). THE FINDINGS STATED THAT, NOTWITHSTANDING THE AVAILABILITY OF THE WAIVERS, THE FIRM FAILED TO APPLY THE WAIVERS TO MUTUAL FUND PURCHASES MADE BY ELIGIBLE CUSTOMERS AND INSTEAD SOLD THEM CLASS A SHARES WITH A FRONT-END SALES CHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES AND HIGHER ONGOING FEES AND EXPENSES. THESE SALES DISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING SUCH CUSTOMERS TO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLY SUPERVISE THE APPLICATION OF SALES CHARGE WAIVERS TO ELIGIBLE MUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS AND OTHER PERSONNEL TO DETERMINE THE APPLICABILITY OF SALES CHARGE WAIVERS, BUT FAILED TO MAINTAIN ADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSIST THEM IN MAKING THIS DETERMINATION. FOR INSTANCE, STEPHENS FAILED TO ESTABLISH AND MAINTAIN WRITTEN PROCEDURES TO IDENTIFY APPLICABLE SALES CHARGE WAIVERS IN FUND PROSPECTUSES FOR ELIGIBLE CUSTOMERS. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN RESPONSIBLE PERSONNEL REGARDING THE AVAILABILITY OF MUTUAL FUND SALES CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. FINRA FOUND THAT THE FIRM FAILED TO ADOPT ADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THEY DID NOT PROVIDE SALES CHARGE WAIVERS TO ELIGIBLE CUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES. Status: Final Sanction Detail: THE FIRM WAS CENSURED AND AGREED TO PAY $150,000, INCLUDING INTEREST, IN RESTITUTION TO ELIGIBLE CUSTOMERS. Summary: THE FIRM BEGAN A REVIEW TO DETERMINE WHETHER IT HAD PROVIDED AVAILABLE SALES CHARGE WAIVERS TO ELIGIBLE CUSTOMERS. BASED ON THIS REVIEW, THE FIRM SELF-REPORTED TO FINRA THAT ELIGIBLE CUSTOMERS HAD NOT RECEIVED AVAILABLE SALES CHARGE WAIVERS. THE FIRM ESTIMATES THAT, APPROXIMATELY 1,300 ACCOUNTS PURCHASED MUTUAL FUND SHARES FOR WHICH AN AVAILABLE SALES CHARGE WAIVER WAS NOT APPLIED. AS A RESULT OF THE FAILURE OF THE FIRM TO APPLY AVAILABLE SALES CHARGE WAIVERS, THE FIRM ESTIMATES THAT ELIGIBLE CUSTOMERS WERE OVERCHARGED BY APPROXIMATELY $150,000 FOR MUTUAL FUND PURCHASES. AS PART OF THIS SETTLEMENT, THE FIRM AGREES TO PAY RESTITUTION TO ELIGIBLE CUSTOMERS WHICH IS ESTIMATED TO TOTAL $150,000(I.E., THE AMOUNT ELIGIBLE CUSTOMERS WERE OVERCHARGED, INCLUSIVE OF INTEREST). THE FIRM WILL ALSO ENSURE THAT RETIREMENT AND CHARITABLE WAIVERS ARE APPROPRIATELY APPLIED TO ALL FUTURE TRANSACTIONS. IN RESOLVING THIS MATTER, FINRA HAS RECOGNIZED THE EXTRAORDINARY COOPERATION OF THE FIRM FOR HAVING: (1) INITIATED, PRIOR TO DETECTION OR INTERVENTION BY A REGULATOR, AN INVESTIGATION TO IDENTIFY WHETHER ELIGIBLE CUSTOMERS RECEIVED SALES CHARGE WAIVERS DURING THE RELEVANT PERIOD; (2) PROMPTLY ESTABLISHED A PLAN OF REMEDIATION FOR ELIGIBLE CUSTOMERS WHO DID NOT RECEIVE APPROPRIATE SALES CHARGE WAIVERS; (3) PROMPTLY SELF-REPORTED TO FINRA; (4) PROMPTLY TAKEN ACTION AND REMEDIAL STEPS TO CORRECT THE VIOLATIVE CONDUCT; AND (5) EMPLOYED SUBSEQUENT CORRECTIVE MEASURES, PRIOR TO DETECTION OR INTERVENTION BY A REGULATOR, TO REVISE ITS PROCEDURES TO AVOID RECURRENCE OF THE MISCONDUCT.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO IDENTIFY AND APPLY SALES CHARGE DISCOUNTS TO CERTAIN CUSTOMERS' ELIGIBLE PURCHASES OF UNIT INVESTMENT TRUSTS (UITS) THAT RESULTED IN CUSTOMERS PAYING EXCESSIVE SALES CHARGES OF APPROXIMATELY $458,747. THE FINDINGS STATED THAT THE FIRM HAS PAID RESTITUTION TO ALL AFFECTED CUSTOMERS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM AND WSPS REASONABLY DESIGNED TO ENSURE CUSTOMERS RECEIVED SALES CHARGE DISCOUNTS ON ALL ELIGIBLE UIT PURCHASES. THE FIRM RELIED PRIMARILY ON ITS REGISTERED REPRESENTATIVES TO ENSURE THAT CUSTOMERS RECEIVED APPROPRIATE UIT SALES CHARGE DISCOUNTS DESPITE THE FACT THAT THE FIRM DID NOT EFFECTIVELY INFORM AND TRAIN REPRESENTATIVES AND THEIR SUPERVISORS TO IDENTIFY AND APPLY SUCH SALES CHARGE DISCOUNTS. Status: Final Sanction Detail: THE FIRM WAS CENSURED, FINED $235,000, AND ORDERED TO PAY $458,747.07 IN RESTITUTION TO AFFECTED CUSTOMERS. Summary: DUE TO THE GROWTH OF STEPHENS' PRIVATE CLIENT GROUP AND, AS A RESULT, THE INCREASE IN THE FIRM'S UIT BUSINESS, THE FIRM UNDERTOOK A REVIEW OF ITS UIT TRADING PROCEDURES. BASED UPON THE REVIEW, IN LATE FEBRUARY 2014 IT WAS DETERMINED THAT THE EXECUTION OF UITS SHOULD BE MOVED FROM THE FIXED INCOME TRADING DESK TO THE PRIVATE CLIENT GROUP TRADING DESK ("DESK"). IN ADDITION TO THE MOVE, NEW PROCEDURES WERE DEVELOPED WHICH INCLUDE, BUT ARE NOT LIMITED TO, ADDITIONAL FRONT-END ACCOUNT REVIEWS, POST EXECUTION REVIEWS, THIRTY-DAY LOOK BACK REVIEWS AND A ROLLOVER TEMPLATE WHICH MUST BE COMPLETED BY THE FINANCIAL CONSULTANT AND PROVIDED TO THE DESK FOR REVIEW PRIOR TO THE EXECUTION OF A ROLLOVER TRANSACTION.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO DISPLAY IMMEDIATELY CUSTOMER LIMIT ORDERS IN NMS STOCK (INCLUDING THE ORDERS' FULL SIZE AND PRICE) IN ITS PUBLIC QUOTATION, WHEN EACH SUCH ORDER WAS AT A PRICE THAT WOULD HAVE IMPROVED THE FIRM'S BID OR OFFER IN EACH SUCH SECURITY; OR WHEN THE ORDER WAS PRICED EQUAL TO THE FIRM'S BID OR OFFER AND THE NATIONAL BEST BID OR OFFER FOR EACH SUCH SECURITY, AND THE SIZE OF THE ORDER REPRESENTED MORE THAN A DE MINIMIS CHANGE IN RELATION TO THE SIZE ASSOCIATED WITH THE FIRM'S BID OR OFFER IN EACH SUCH SECURITY. Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $7,500. Summary: EACH OF THE LIMIT ORDERS SUBJECT TO THE FINRA REVIEW WERE IMMEDIATELY ROUTED BY STEPHENS INC. TO THE NASDAQ EXCHANGE FOR EXECUTION. HOWEVER, THE ORDERS WERE INADVERTENTLY SENT WITH AN INSTRUCTION TO DISPLAY ONLY 100 SHARES OF THE ORDER (WITH THE REMAINDER PLACED IN RESERVE) RATHER THAN THE ENTIRE ORDER SIZE AS REQUIRED BY RULE 604. THE ORDERS WERE AUTO-ROUTED OUT OF THE FIRM TO THE NASDAQ EXCHANGE PER CERTAIN ROUTING RULES SET UP WITHIN THE FIRM'S ORDER MANAGEMENT SYSTEM (OMS). THE INSTRUCTION TO DISPLAY ONLY 100 SHARES OF THE ORDER WAS NOT SET UP BY THE FIRM ITSELF BUT WAS A DEFAULT ROUTING RULE WITHIN THE OMS. SPECIFICALLY, THIS ROUTING RULE APPLIED ONLY TO LIMIT ORDERS UNDER 5,000 SHARES IN NYSE-LISTED SECURITIES THAT THE FIRM ROUTED TO THE NASDAQ EXCHANGE. THIS ROUTING RULE DID NOT APPLY TO ORDERS OF MORE THAN 5,000 SHARES IN NYSE-LISTED SECURITIES ROUTED TO THE NASDAQ EXCHANGE, NOR DID IT APPLY TO LIMIT ORDERS IN NASDAQ SECURITIES HANDLED BY THE FIRM. IN ADDITION, EACH OF THE CUSTOMER LIMIT ORDERS CITED IN THE FINRA REVIEW WERE FILLED AT THE LIMIT PRICE IF AND WHEN THEY BECAME ELIGIBLE FOR EXECUTION. THIS ISSUE WAS RESOLVED BY AN UPGRADE TO THE FIRM'S OMS THAT WAS IMPLEMENTED WITHIN A MONTH OF THE FINRA REVIEW PERIOD (IN APRIL 2013).

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT DID NOT ADEQUATELY SUPERVISE THE CONTENT AND DISSEMINATION OF FIRM-WIDE "FLASH" EMAILS THROUGH WHICH ITS RESEARCH ANALYSTS ALERTED OTHER FIRM PERSONNEL TO NEWS AND INSIGHTS CONCERNING COMPANIES AND INDUSTRIES COVERED BY THE FIRM'S RESEARCH DEPARTMENT. THE FINDINGS STATED THAT THE FIRM ALSO FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE ADEQUATE WRITTEN SUPERVISORY PROCEDURES CONCERNING SECURITIES TRADING IN CONNECTION WITH THESE FLASH EMAILS. THESE FAILURES COLLECTIVELY CREATED THE RISK THAT FLASH EMAILS COULD POTENTIALLY INCLUDE MATERIAL NONPUBLIC INFORMATION THAT MIGHT BE MISUSED BY SALES AND TRADING PERSONNEL. ALTHOUGH THE FLASH EMAIL PROGRAM WAS INTENDED TO CONVEY ONLY PUBLICLY-AVAILABLE INFORMATION, THE FIRM DID NOT HAVE ADEQUATE POLICIES AND PROCEDURES TO SUPERVISE THE CONTENT OF THE FLASH EMAILS, AND IN PRACTICE FLASH EMAILS SOMETIMES CONVEYED MORE THAN THAT. THE FLASH EMAILS WERE NOT SUBJECT TO THE LEVEL OF SYSTEMATIC SUPERVISORY REVIEW AND APPROVAL APPLIED TO PUBLISHED RESEARCH, EITHER BEFORE OR AFTER THEY WERE CIRCULATED, UNLESS AN ISSUER MENTIONED IN THE EMAIL WAS ON A FIRM RESTRICTED LIST. MOREOVER, FLASH EMAILS DID NOT CONTAIN THE DISCLOSURES REQUIRED BY SEC REGULATIONS AND FINRA RULES FOR PUBLISHED RESEARCH. THE FINDINGS ALSO STATED THAT IN AT LEAST ONE INSTANCE, THE CONTENT FROM AN UNAPPROVED, DRAFT RESEARCH REPORT WAS CUT AND PASTED INTO A FLASH EMAIL. THE FINDINGS ALSO INCLUDED THAT ALTHOUGH FLASH EMAILS WERE MARKED FOR INTERNAL USE ONLY, THE FIRM'S PERSONNEL SOMETIMES FORWARDED THEM TO FIRM CUSTOMERS OR CUT AND PASTED THE TEXT OF A FLASH EMAIL INTO A SEPARATE COMMUNICATION SENT TO A FIRM CUSTOMER. THE FINDINGS ALSO INCLUDED THAT WHEN THE FIRM PUBLISHED A RESEARCH REPORT CONTAINING A RATINGS CHANGE, FIRM POLICY PROHIBITED EMPLOYEES FROM TRADING THE SECURITIES OF THE AFFECTED ISSUER IN THE DIRECTION OF THE NEW RATING DURING THE TWO BUSINESS DAYS FOLLOWING PUBLICATION OF THE REPORT. HOWEVER, THE FIRM DID NOT SYSTEMATICALLY MONITOR FOR TRADING THAT OCCURRED SHORTLY BEFORE THE PUBLICATION OF RESEARCH REPORTS CONTAINING RATING, ESTIMATE, OR PRICE TARGET CHANGES OR DURING THE PERIOD BETWEEN THE TIME A FLASH EMAIL WAS DISTRIBUTED AND THE PUBLICATION OF A SUBSEQUENT RESEARCH REPORT CONTAINING SUCH CHANGES. FINRA FOUND THAT THE FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE ADEQUATE SYSTEMS AND PROCEDURES TO SUPERVISE FLASH EMAILS AND RELATED TRADING. FINRA ALSO FOUND THAT THE FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE POLICIES AND PROCEDURES REASONABLY DESIGNED TO RESTRICT OR LIMIT THE INFORMATION FLOW BETWEEN RESEARCH DEPARTMENT PERSONNEL AND TRADING DEPARTMENT PERSONNEL SO AS TO PREVENT TRADING DEPARTMENT PERSONNEL FROM USING MATERIAL, NON-PUBLIC ANALYST RESEARCH FOR THE BENEFIT OF THE FIRM, ITS EMPLOYEES, AND ITS CUSTOMERS. Status: Final Sanction Detail: THE FIRM IS CENSURED, FINED $900,000 AND UNDERTAKES WITHIN 60 DAYS OF THE DATE OF THE NOTICE OF ACCEPTANCE OF THIS AWC, THE FIRM SHALL CERTIFY TO FINRA IN A SUBMISSION SIGNED BY AN OFFICER OF THE FIRM THAT IT HAS CEASED DISTRIBUTING FLASH EMAILS. FURTHERMORE, THE FIRM UNDERTAKES WITHIN 90 DAYS OF THE DATE OF NOTICE OF ACCEPTANCE OF THIS AWC, SUBMIT TO FINRA A WRITTEN PLAN OF HOW IT WILL CONDUCT A COMPREHENSIVE REVIEW OF THE ADEQUACY AND IMPLEMENTATION OF ITS POLICIES AND PROCEDURES (WRITTEN AND OTHERWISE) AND TRAINING IN THE RESEARCH AREA.

Allegations: UNTIL AUGUST 7, 2009, STEPHENS HAD NO WRITTEN COMPLIANCE POLICY THAT SPECIFICALLY ADDRESSED THE SALE OF LEVERAGED AND INVERSE ETFS. IN ADDITION, FOR SEVERAL MONTHS AFTER AUGUST 7, 2009, STEPHENS WAS UNABLE TO ENFORCE ITS WRITTEN COMPLIANCE POLICY CONCERNING LEVERAGED AND INVERSE ETFS. Status: Final Sanction Detail: THE TOTAL AMOUNT OF THE FINE WAS $25,000. THE FINE WAS PAID IN FULL ON AUGUST 26, 2013. NO AMOUNT OF SAID FINE WAS WAIVED.

Allegations: SEC ADMIN RELEASES 33-9843; 34-75237, JUNE 18, 2015: THE SECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED AGAINST STEPHENS INC. ("RESPONDENT"). RESPONDENT WILLFULLY VIOLATED SECTION 17(A)(2) OF THE SECURITIES ACT. THIS MATTER INVOLVES VIOLATIONS OF AN ANTIFRAUD PROVISION OF THE FEDERAL SECURITIES LAWS IN CONNECTION WITH RESPONDENT'S UNDERWRITING OF CERTAIN MUNICIPAL SECURITIES OFFERINGS. RESPONDENT, A REGISTERED BROKER-DEALER, CONDUCTED INADEQUATE DUE DILIGENCE IN CERTAIN OFFERINGS AND AS A RESULT, FAILED TO FORM A REASONABLE BASIS FOR BELIEVING THE TRUTHFULNESS OF CERTAIN MATERIAL REPRESENTATIONS IN OFFICIAL STATEMENTS ISSUED IN CONNECTION WITH THOSE OFFERINGS. THIS RESULTED IN RESPONDENT OFFERING AND SELLING MUNICIPAL SECURITIES ON THE BASIS OF MATERIALLY MISLEADING DISCLOSURE DOCUMENTS. THE VIOLATIONS WERE SELF-REPORTED BY RESPONDENT TO THE COMMISSION PURSUANT TO THE DIVISION OF ENFORCEMENT'S (THE "DIVISION") MUNICIPALITIES CONTINUING DISCLOSURE COOPERATION (MCDC) INITIATIVE. Status: Final Sanction Detail: THE RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 17(A)(2)OF THE SECURITIES ACT, PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $400,000 AND COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT. Summary: IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS, RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER") WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THE PURPOSE OF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TO WHICH THE COMMISSION IS A PARTY, AND WITHOUT ADMITTING OR DENYING THE FINDINGS, EXCEPT AS TO THE COMMISSION'S JURISDICTION OVER IT AND THE SUBJECT MATTER OF THESE PROCEEDINGS, WHICH ARE ADMITTED, RESPONDENT CONSENTS TO THE ENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 AND SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER. IN VIEW OF THE FOREGOING, THE COMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST TO IMPOSE THE SANCTIONS AGREED TO IN RESPONDENT'S OFFER. ACCORDINGLY, IT IS HEREBY ORDERED THAT RESPONDENT SHALL, CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF 17(A)(2)OF THE SECURITIES ACT; WITHIN TEN (10) DAYS OF THE ENTRY OF THIS ORDER, PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $400,000 TO THE SECURITIES AND EXCHANGE COMMISSION; AND RETAIN AN INDEPENDENT CONSULTANT TO CONDUCT A REVIEW OF RESPONDENT'S POLICIES AND PROCEDURES AS THEY RELATE TO MUNICIPAL SECURITIES UNDERWRITING DUE DILIGENCE.

Allegations: THE ORDER ALLEGES STEPHENS INC. BREACHED ITS FIDUCIARY DUTY TO CLIENTS AND VIOLATED SECTIONS 206(2) AND 207 OF THE ADVISERS ACT IN THAT STEPHENS INC. PURCHASED, RECOMMENDED OR HELD FOR CLIENT ACCOUNTS MUTUAL FUND SHARE CLASSES THAT PAID STEPHENS INC. 12B-1 FEES BUT FAILED TO ADEQUATELY DISCLOSE CONFLICTS OF INTEREST WITH THESE SHARE CLASSES IN THAT CHEAPER SHARE CLASSES OF THE SAME FUNDS WERE AVAILABLE TO CLIENTS WHICH DID NOT PAY 12B-1 FEES. Status: Final Sanction Detail: STEPHENS INC. WAS ORDERED TO CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS 206(2) AND 207 OF THE INVESTMENT ADVISERS ACT OF 1940. FURTHER, STEPHENS INC. WAS CENSURED AND ORDERED TO PAY DISGORGEMENT OF $5,000,738.11 AND PREJUDGMENT INTEREST OF $488,381.23 AND ORDERED TO COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT. Summary: STEPHENS INC. VOLUNTARILY PARTICIPATED IN THE SEC'S SHARE CLASS SELECTION DISCLOSURE INITIATIVE WHICH RELATED TO MUTUAL FUND SHARES SOLD TO STEPHENS INC. ADVISORY CLIENTS. THE ORDER ALLEGED THAT STEPHENS INC. DID NOT ADEQUATELY DISCLOSE CONFLICTS OF INTEREST RELATED TO THE SELECTION OF MUTUAL FUND SHARE CLASSES FOR ADVISORY CLIENTS WHICH PAID STEPHENS INC. 12B-1 FEES WHEN LESS EXPENSIVE SHARE CLASSES OF THE SAME FUND WERE AVAILABLE WHICH DID NOT PAY STEPHENS INC. THESE 12B-1 FEES. STEPHENS AGREED TO RESTITUTION TO AFFECTED CLIENTS OF THESE FEES IN THE AMOUNT OF $5,000,738.11 PLUS PREJUDGMENT INTEREST OF $488,381.23. (IA RELEASE NUMBER 40-5196, MARCH 11, 2019).