Ronald Kruszewski, board chairman and CEO of Stifel Financial Corp. and Stifel, Nicolaus & Co., Inc., faced some questions in a television interview last week about the ongoing lawsuit in Milwaukee County circuit court regarding $200 million of risky investments his firm helped sell to five Wisconsin school districts in 2006.
Stifel was sued by the five districts, as was the Royal Bank of Canada, for allegedly misleading school officials into believing their investments were safe. The investments have since lost most of their value and the districts are doubtful they will receive much money back when the investments mature in 2013.
Milwaukee judge William Brash ruled against requests by Stifel and RBC to dismiss the lawsuit.
In this CNBC interview about Stifel Financial's revenue gains in the last quarter of 2009, Kruszewski is asked about the lawsuit.
Here's the meat of his answer: "First of all, we acted as placement agent. We did not structure or make the product; we advised on it. It was a double-A-rated security at the time. And I think it underscores the problem that happened in structured finance. At the time, everybody thought these things were safe and that they were good. And we certainly thought so. And it turned out not to be so."