WASHINGTON – Raymond James agreed to pay $15 million to settle Securities and Exchange Commission charges that three of its entities overcharged advisory fees on inactive retail accounts and charged excess commissions for brokerage investments in unit investment trusts.
“Raymond James Financial Services Advisors, Inc., failed to consistently perform promised ongoing reviews of advisory accounts that had no trading activity for at least one year,” the SEC said in a release. “According to the 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 entities also misapplied the wrong pricing data to certain UIT positions held by advisory clients, causing them to overpay fees.”
Dabney O’Riordan, co-chief of the SEC Enforcement Division’s Asset Management Unit said, “Investment advisers and broker-dealers have ongoing obligations to their clients and customers. Raymond James’ failures cost their advisory clients and brokerage customers millions that will be repaid as part of this settlement.”
Raymond James & Associates and Raymond James Financial Services Advisors, were charged with violating Sections 206(2)(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7, and charges the entities with violating Sections 17(a)(2)(3) of the Securities Act of 1933.
To settle the charges, the three Raymond James entities will 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 for a total of $15 million. The entities have agreed to make distributions to harmed investors.
The SEC’s investigation was conducted by Salvatore Massa in the Asset Management Unit and New York Regional Office. SEC staff received assistance from Mark Fowler of the Office of Compliance, Inspections and Examination from the Philadelphia Regional Office and members of the OCIE’s Risk Analysis Examination Team.
AdvisorNews Managing Editor Cassie Miller may be reached at cassie.miller@Adnewsfeedback.com. Cassie has an extensive background in magazine writing, editing and design. Follow her on Twitter @ANCassieM.