Raymond James to pay $500K for Failure to Supervise

Raymond James’ Rep Reportedly Imprisoned after Allegations of Stealing from Elderly Clients 

According to the Securities and Exchange Commission on September 22, 2022, the agency reportedly ordered Raymond James & Associates to pay a penalty of $500,000 for allegedly failing to supervise a former registered representative and broker who was sentenced to five years in prison last year for allegedly misappropriating more than $900,000 from two older clients from October 2015 through April 2019. 

According to the SEC’s order, Frederick M. Stow of Franklin, Tennessee, purportedly stole $901,500 from one of the clients, a World War II Veteran, between October 2015 and April 2019. After that client died at the age of 98, Stow purportedly stole an additional $22,400 from another older client. To learn more see: Financial Advisor Frederick Stow Reportedly Charged with Defrauding Senior Veteran 

In June 2018, supervisors reportedly referred concerns about Stow’s management of the first client’s accounts to Raymond James’ Senior-and-at-Risk-Clients (SARC) group, which had been formed in late 2017 to respond mainly to potential external threats of financial exploitation, according to the SEC order. 

After SARC allegedly declined to take action, the Raymond James supervisors reportedly failed to investigate the concerns further because of a lack of clear communication from the firm about the scope of SARC’s investigation and the process for next steps. 

According to the order, of the $901,500 misappropriated from the first client, $148,000 was drawn between the end of the investigation and when the broker reportedly confessed his fraud in May 2019. 

The SEC order found that Raymond James failed to develop policies and procedures reasonably designed to communicate clearly to supervisory and compliance staff SARC’s process or the scope of SARC’s work in supporting supervisors. 

The firm also failed to reasonably supervise Stow from July 2018 through April 2019, violating the Securities Exchange Act of 1934, according to the SEC. 

Stow was reportedly registered with Raymond James from 2013 to 2019 when he was reportedly fired for “misappropriating funds from customer accounts,” according to his FINRA BrokerCheck report.  

FINRA reportedly barred Stow on Oct. 18, 2019, after he failed to respond to its request for information, effective Jan. 21, 2020, according to FINRA. 

Stow was charged in June 2020 with securities fraud, wire fraud and aggravated identity theft by the Justice Department. He pleaded guilty in August 2020. 

Raymond James, without admitting or denying the SEC’s findings, consented to the penalty and a censure to settle the dispute. 

The judge also reportedly ordered a forfeiture money judgment of $933,500. 

Potential Lawsuits to Recover Investment Losses 

Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.  

When brokers violate securities laws the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration. 

If you are concerned about your investments with Raymond James, please call the securities fraud attorneys at The White Law Group at 888-637-5510 for a free consultation. 

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington. 

 For more information on The White Law Group, and its representation of investors, please visit www.WhiteSecuritiesLaw.com. To learn more, see: 10 Worst Financial Advisors in America according to Think Advisor