Raymond James struck a deal with the Securities and Exchange Commission (SEC) in which the company agreed to pay $ 15 million in restitution and fines for allegedly overcharging customers.
The regulator issued a settled order against three Raymond James entities for improperly charging advisory fees on inactive retail client accounts and charging excess commissions for brokerage clients’ investments in certain capital investment trusts variable (ITU).
Raymond James & Associates and Raymond James Financial Services Advisors – the advisory entities – reportedly failed to perform ongoing reviews of inactive advisory accounts and, therefore, failed to determine whether the fee-based accounts of these clients were appropriate, according to the order of the SEC. .
Between January 2013 and September 2017, entities reportedly failed to properly review 7,708 advisory accounts after having had no securities trading activity for at least 12 months, as required by the company’s own policies and procedures, according to the SEC ordinance. Inactive accounts paid approximately $ 4.9 million in advisory fees during that time.
The order also revealed that the entities had overstated certain assets, resulting in the billing of approximately $ 51,000 in excess advisory fees.
Further, the order revealed that Raymond James & Associates and Raymond James Financial Services had recommended their brokerage clients to sell UITs ahead of maturity and purchase new UITs without adequately determining whether their suitability. As a result, customers incurred – and the Raymond James entities received – higher sales commissions than would have been charged if customers had kept the UITs to maturity and then purchased new UITs, according to the order.
The SEC said the activity affected 2,044 brokerage accounts and generated about $ 5.5 million in excess sales charges. The entities also allegedly failed to apply nearly $ 660,000 in rebates applicable to sales charges to brokerage clients in 5,468 eligible accounts.
A spokesperson for Raymond James sent Citywire the following statement:
âWe are delighted to have closed these matters and have revised our policies and procedures to address the oversight improvements required by the SEC at Raymond James and a number of competitor companies. The company has completed remediation with the appropriate clients and looks forward to continuing to provide the best service in the industry in support of their goals. ‘
To settle the charges, the three Raymond James entities agreed to be censored and reimburse approximately $ 12 million for inappropriate client counseling fees and ITU commissions, including interest, and to pay a civil fine of $ 3 million. dollars. The entities have agreed to make distributions to aggrieved investors.
Read SEC Order Against Raymond James here.