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SEC: Raymond James to Pay $15 Million for Improperly Charging Retail Investors

The Securities and Exchange Commission has agreed to settle charges against three Raymond James entities for improperly charging advisory fees on inactive retail client accounts and charging excess commissions for brokerage customer investments in certain unit investment trusts.

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The Securities and Exchange Commission has agreed to settle charges against three Raymond James entities for improperly charging advisory fees on inactive retail client accounts and charging excess commissions for brokerage customer investments in certain unit investment trusts.

The SEC claims that Raymond James & Associates and Raymond James Financial Services Advisors failed to consistently perform promised ongoing reviews of advisory accounts that had no trading activity for at least one year.

According to the SEC’s order, because they did not conduct the reviews properly, they failed to determine whether the client’s fee-based advisory account was suitable. The order further finds that the firms also misapplied the wrong pricing data to certain UIT positions held by advisory clients, causing them to overpay fees.

In addition, the order finds that Raymond James & Associates and Raymond James Financial Services recommended that their brokerage customers sell UITs before their maturity and buy new UITs without adequately determining whether these recommendations were suitable.

The SEC said that the recommendations for early sales and purchases resulted in customers incurring (and the Raymond James entities receiving) greater sales commissions than would have been charged had the customers held the UITs to maturity and then purchased new UITs.

The order further finds that Raymond James also failed to apply available sales discounts for brokerage customers that rolled over their proceeds after selling a maturing UIT to purchase another one.

“Investment advisers and broker-dealers have on-going obligations to their clients and customers,” said C. Dabney O’Riordan, co-chief of the SEC Enforcement division’s asset management unit. “Raymond James’ failures cost their advisory clients and brokerage customers millions that will be repaid as part of this settlement.”

The three Raymond James entities agreed to be censured and to disgorge approximately $12 million representing inappropriate client advisory fees and unit investment trust commissions, together with prejudgment interest, and to pay a $3 million civil penalty. The three Raymond James entities have agreed to make distributions to the affected investors.

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