Three Raymond James entities — Raymond James & Associates, Inc., Raymond James Financial Services Advisors, Inc., and Raymond James Financial Services, Inc. (RJF) — have agreed to pay $15M to settle US Securities and Exchange Commission (SEC) charges accusing the brokerage firm of charging excess commissions to customers that invested in certain united investment trusts (UITs) and, also, of improperly charging advisory fees to retail client accounts that were no longer active. As part of the settlement, the Raymond James entities will issue distributions to investors who were affected.
According to the SEC’s cease-and-desist order, from at least 1/2013 through 5/2018, Raymond James & Associates and Raymond James Financial Services Advisors:
- Didn’t not perform suitability reviews as promised.
- Failed to put into place procedures and policies designed in a reasonable enough manner to stop violations involving fee-based advisory accounts’ suitability.
- Charged excessive advisory fees by overvaluing certain assets.
Raymond James Advisers is supposed to perform reviews during “specified intervals” to make sure that advisory accounts are still suitable for clients and/or whether their assets should be transferred to a brokerage account. Instead, the firm is accused of not conducting these reviews in a timely enough and adequate manner, including between 1/2013 and 9/2017 when it purportedly did not properly reviewing more than 7,700 advisory accounts in which there had been no securities trading for at least a year. Yet, these inactive accounts paid the firm about $4.9M in advisory fees.
In regards to advisory clients and brokerage customers that owned UITs, Raymond James brokers are accused of not having reasonable grounds for recommending that some customers sell “certain UIT positions” before they reached the dates of maturity and then “re-purchase” UIT positions that had just been issued. These transactions purportedly resulted in $5.5M in “excess sales charges” to over 2,000 brokerage accounts.
The SEC’s order accuses Raymond James of not notifying clients that it had a conflict of interest when it recommended UITs but didn’t apply nearly $660K in sales load discounts to the almost 5,500 brokerage accounts that qualified for the reductions. Raymond James brokers purportedly received “greater compensation” a result.
Also, Raymond James Advisors is accused of collectively charging some advisory clients about $51K in excess fees after the firm used “incorrect” UIT calculations to figure out said fees.
Of the $15M that the three Raymond James entities agreed to pay to settle the SEC case, $12M is for disgorgement and prejudgment interest for the inappropriate fees and UIT commissions. $3M is a civil penalty.
Our securities fraud lawyers at Shepherd Smith Edward and Kantas, LLP (SSEK Law Firm) represent investors who have lost money due to investment adviser fraud/negligence and broker fraud/ negligence. We also have successfully pursued investor claims against broker-dealers and investment advisers whose practices have resulted in unnecessary losses and excess charges to clients. If you believe that you sustained unnecessary charges or losses as a Raymond James client, please contact SSEK Law Firm today.