Yesterday, a hearing officer assigned to hear two financial securities cases related to former Arkansas Treasurer Marsha Shoffner issued a final order on the matter of Steele Stephens, the broker at St. Bernard Financial Services of Russellville who bribed Shoffner to obtain a higher volume of the state’s bond business.

Stephens was ordered to pay a $20,000 fine by Jack Pruinski, the lawyer assigned to the case as a hearing officer in December. The order also formally revokes his registration as a securities agent in Arkansas as of June 20, 2013.

That fine is far smaller than it could be. The Arkansas Securities Department was reportedly seeking up to $150,000 in fines against Stephens.

The final order concludes that the financial trades that Stephens made with the state’s money weren’t necessarily bad deals in and of themselves — even though, as a matter of established fact, Shoffner directed business to Stephens in part because he slipped her cash to do so.


Pruinski’s order says, in part, “this conclusion is based upon the limited number of sales before maturity/call, the determination by the St. Bernard Compliance Department that the transactions were suitable and the sophistication level of the Arkansas Treasurer’s Office. Based on this information, Stephens had reasonable grounds fro believing that the recommended transactions were suitable for Arkansas Treasurer’s Office.”

Because Stephens cooperated with the FBI in the sting operation which eventually led to Shoffner’s arrest, he was immune from prosecution in the subsequent investigation of the state treasurer. He also wasn’t required to pay back commissions he’d received on the bond transactions.


The second securities complaint related to the Shoffner scandal, which was against St. Bernard itself, was resolved in March with a $25,000 settlement.

Robert Keenan, head of St. Bernard, said that Thursday’s ruling was further vindication of what he has claimed from the beginning: Stephens’ shady dealings with Shoffner were confined to the bribes, not anything to do with how the bond business itself was then conducted. Keenan said in an email that the $20,000 fine amounts to a “clear victory” for Stephens (who stopped working for St. Bernard when the scandal originally broke): 

You have heard me say all along that there was nothing wrong with the bond business that St Bernard did with the Arkansas Treasury. In fact the Legislative Audit report on Sept 14 of 2012 said our yields were excellent. The only problem was Steele Stephens giving money to Martha Shoffner.

The SEC and FINRA both looked at the trades extensively and found nothing wrong.

The Arkansas Securities Dept went after me, St Bernard, and Steel Stephens anyway over the “suitability” of the trades. … The Securities Dept wanted $210,000, Stephens had offered to settle for $55,000 and they said no way. By leaving out the other charges the Hearing Officer shows that there were no issues with suitability. The Securities Dept is probably feeling the “agony of defeat” over this ruling.

Here’s Pruinski’s final order: