Written by The White Law Group• September 3, 2024• 4:15 am• Blog, FINRA SEC Sanctions, Securities Fraud Articles

Raymond James & Associates: Failure to Supervise

Raymond James complaints, Raymond James FINRA lawsuit, Raymond James investigation, Raymond James investor disputes, Raymond James lawsuit, Raymond James , featured by top securities fraud attorneys, the White Law Group

The White Law Group reviews the regulatory history of Raymond James & Associates.

Raymond James & Associates, (CRD#: 705/SEC#: 801-10418,8-10999) headquartered in St. Petersburg, FL, is dually registered as an investment adviser and broker-dealer. The firm has been a FINRA member since 1962. The firm manages $350 billion in assets under management.

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The firm has 234 disclosures noted on its CRD or broker report, including 162 regulatory actions and 72 arbitrations.

Regulatory actions taken against a broker-dealer may include censures, fines, suspensions, and restitution, among others. They can have grave consequences for a broker-dealer’s profile and reputation. The following is a review of FINRA and the SEC’s (among others) regulatory actions involving Raymond James & Associates.

Failure to Supervise Customer Complaint Reporting

According to FINRA this week, Raymond James & Associates, Inc. (RJA) and Raymond James Financial Services, Inc. (RJFS) were censured and fined, $525,000 and $1.3 Million, respectively for supervisory failures.

According to FINRA’s findings, since at least January 2018, RJA and RJFS have failed to reasonably supervise the firms’ reporting of customer complaints via FINRA Rule 4530 filings and amendments to registered representatives’ Forms U4 and U5.

The firms reportedly failed to take reasonable steps to ensure that firm personnel manually enter into the firms’ electronic system certain data required to make quarterly FINRA Rule 4530 filings. The firms also allegedly failed to ensure that associated persons timely notify appropriate firm personnel of customer complaints. The alleged violations are in connection with FINRA Rules 3110, 1122, 4530, and 2010.

From January 2012 to at least December 2017, RJA and RJFS also failed to reasonably supervise at least 4.7 million mutual fund purchases that the firms’ representatives made directly with mutual fund companies on behalf of firm customers. The firms also reportedly failed to ingest many transactions into their automated surveillance systems, and had not configured their systems to review many other transactions, a violation of FINRA Rule 3110.

Raymond James Reps Allegedly Schemed to Overcharge Customers

October 20, 2022 – Raymond James Financial Services (RJFS) has been censured and fined by the Financial Industry Regulatory Authority (FINRA) for supervisory failures and other rules violations, agreeing to a settlement that includes an $800,000 fine and restitution.

The firm allegedly failed to reasonably supervise two registered representatives involved in a commission overcharging scheme targeting seven institutional customers from January 2012 to April 2018. The representatives reportedly manipulated commissions by instructing the trading desk to increase them before execution, created misleading trade confirmations, and overcharged customers approximately $2.4 million.

Despite multiple red flags, RJFS purportedly failed to adequately investigate the scheme until it was flagged in April 2018. Separately, from January 2012 to February 2020, Raymond James and Associates and R.JFS failed to have a qualified and registered principal authorize changes to the account name or designation on more than 7,500 equity orders. Raymond James and Assoicates was censured and fined $300,000.

The SEC orders Raymond James to pay $500,000

September 22, 2022 – The Securities and Exchange Commission (SEC) ordered Raymond James & Associates to pay a $500,000 penalty for allegedly failing to supervise a former registered representative, Frederick M. Stow. Stow was sentenced to five years in prison for allegedly misappropriating over $900,000 from two elderly clients between October 2015 and April 2019.

Stow purportedly stole $901,500 from a World War II veteran client and an additional $22,400 from another client after the first one passed away. Despite concerns raised by supervisors in June 2018, Raymond James’ Senior-and-at-Risk-Clients (SARC) group declined to act.

The SEC found that Raymond James failed to develop effective policies and procedures to communicate SARC’s process, leading to a lack of investigation into Stow’s activities. The firm also allegedly failed to reasonably supervise Stow from July 2018 to April 2019, violating the Securities Exchange Act of 1934.

529 Savings Plans Violations

October 7, 2019 – Raymond James & Associates, and Raymond James Financial Services agreed to pay a total of $12 million in restitution to customers for alleged violations related to 529 savings plans, according to the Financial Industry Regulatory Authority (FINRA).

Despite FINRA’s initiative for self-reporting regulatory violations in 529 plans, these issues pre-dated the program. The firm was accused of failing to reasonably supervise 529 plan share-class recommendations, leading customers to incur excess fees on their investments. Raymond James & Associates had to pay over $3.8 million in restitution, while Raymond James Financial Services paid $4.2 million.

FINRA Fines Raymond James $2 Million

December 21, 2017 -Raymond James Financial Services has been fined $2 million by the Financial Industry Regulatory Authority (FINRA) for its failure to maintain effective supervisory systems and procedures for reviewing email communications.

Over a nine-year period, Raymond James’ flawed email review system allowed millions of emails to escape meaningful review, posing a risk that potential misconduct by firm personnel could go undetected. As part of the settlement, Raymond James has agreed to conduct a risk-based retrospective review to identify potential violations evidenced in past emails.

Firm to pay $150 Million to Settle Fraud Charges

April 18, 2017 – Raymond James Financial agreed to pay $150 million to settle investor claims related to the Jay Peak Fraud case, involving an allegedly fraudulent Vermont ski resort project.

The settlement arises from charges filed by the SEC in 2016, accusing Ariel Quiros and William Stenger of misusing $200 million raised from investors for personal and improper expenses. Raymond James branch manager Joel Burstein, implicated in aiding the scheme, voluntarily resigned.

Raymond James Sanctioned for Overcharging Charitable Organizations

July 6, 2015 – Raymond James was penalized by FINRA for unfairly treating eligible retirement plan and charitable organization customers. These customers, entitled to purchase Class A shares in certain mutual funds without a front-end sales charge, were allegedly sold Class A shares with such charges or Class B/C shares with back-end charges and higher fees.

FINRA found that Raymond James lacked a proper supervisory system to ensure these customers received the applicable sales charge waivers. Consequently, Raymond James violated NASD Conduct Rule 3010 and FINRA Rules 3110 and 2010. As part of the sanctions, FINRA censured Raymond James and ordered restitution totaling $4,209,583.44 to affected customers.

Broker Misconduct and Customer Complaints

There have been numerous cases of registered representatives employed by Raymond James & Associates who were allegedly involved in broker misconduct and/or fraudulent activities.

Raymond James Broker Suspended and Fined for Unauthorized trading

December 21, 2021 – In June and July 2019, while associated with RJA and registered with FINRA, a registered representative Raymond James effected nine transactions in four customers’ accounts totaling approximately $289,000 without first obtaining authorization from each customer. As a result, the broker engaged in unauthorized trading in violation of FINRA Rule 2010. He was suspended and fined $7,500 and ordered to disgorge his commissions.

Oregon Sanctions Raymond James Advisor Gary Dodds for Churning

March 31, 2021 – Financial advisor Gary Dodds of Bend, Oregon, and his former employer, Raymond James Financial Services, Inc., have been fined $220,000 by the Oregon Division of Financial Regulation for excessively trading accounts of five elderly clients.

Dodds is accused of churning or excessively trading accounts from 2016 to 2018, making unsuitable recommendations, and failing to maintain proper documentation. Raymond James, allegedly aware of Dodds’ actions, did not take adequate corrective measures.

Dodds faced a cease-and-desist order, a $100,000 civil penalty, and a five-year ban on applying for any financial services license in Oregon. Raymond James was fined $120,000 and agreed to provide $123,379 in restitution to the affected seniors.

Supervision Rules

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct. 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, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.

The White Law Group files a Claim Against Raymond James

October 2020 – The White Law Group filed a FINRA Dispute Resolution claim in against Raymond James & Associates, Inc. on behalf of a Pennsylvania resident, requesting damages for alleged violation of common law fraud, breach of fiduciary duty, negligence, and negligent supervision. The claim alleged that registered representative Barry Richter & Raymond James & Associates recommended unsuitable REITs and energy investments.

National Securities Attorneys

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.

The Financial Industry Regulatory Authority (FINRA) operates the largest dispute resolution forum in the securities industry. In fact, FINRA Dispute Resolution is the forum for almost all disputes between investors, brokerage firms and individual brokers. This is because most brokerage firms have mandatory arbitration clauses in their account agreements that require investors to file their disputes through FINRA.

The White Law Group represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.

With over 30 years of securities law experience, The White Law Group has the expertise to help investors who were defrauded by their financial advisors. For more information, please visit our website, www.whitesecuritieslaw.com.

If you have suffered losses investing with Raymond James & Associates and would like to speak with a securities attorney, please call The White Law Group at 888-637-5510.