Stifel Nicolaus is fighting SEC charges that its reps sold $200 million in collateralized debt to Wisconsin schools that just could not handle the risk.
The SEC claims that back in 2006, Stifel broker David Noack told the schools that it would take a financial disaster on the scale of "15 Enrons" for the securities to fail.
The schools' pension funds were also enticed to borrow $162 million of the $200 million cost of the extremely complex securities, compounding their risk with 500% leverage.
As it turns out, the placements started to sink almost from Day One and eventually ended with "complete" losses.
Stifel argues that it was only the placement agent and that RBC, which created the securities, determined their suitability.
RBC says that's just not true.