Raymond James settles claims with federal regulators

Three Raymond James entities agreed to pay $15 million to settle claims that they improperly charged advisory fees and excess commissions on certain accounts.

The companies agreed to repay about  $12.2 million to clients who were impacted, as well as a $3 million civil penalty, according to the settlement order with the U.S. Securities and Exchange Commission.

All the companies involved are part of Raymond James Financial (NYSE: RJF), a St. Petersburg-based financial service firm and one of the largest companies headquartered in the Tampa-St. Pete area.

“We are pleased to have these matters concluded and have revised our policies and procedures to address the supervisory enhancements required by the SEC at Raymond James and a number of competitor firms,” Raymond James said in a statement. “The firm has completed remediation with the appropriate clients and looks forward to continuing to provide best-in-industry service in support of their goals.”

Two types of accounts were involved, the SEC said.

One type was advisory accounts that had no trading activity for at least a year. Raymond James & Associates and Raymond James Financial Services Advisors failed to consistently perform reviews of those accounts and failed to determine if the fee-based accounts were suitable, the SEC said in a news release.

The SEC also looked at how Raymond James & Associates and Raymond James Financial Services dealt with unit investment trusts, which hold a portfolio of securities that are not actively management by an advisor. Unit investment trusts, or UTIs, are often more beneficial for investors who adopt a buy-and-hold strategy, the SEC said. Still, some Raymond James brokers recommended their customers sell the unit investment trusts before maturity and buy new UITs, increasing the sales commissions, according to the SEC settlement,

In addition, Raymond James failed to apply available sales discounts for brokerage customers that rolled over their proceeds after selling a maturing UIT to purchase another one, the SEC said.

“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.”

Raymond James consented to an order instituting administrative and cease-and-desist proceedings without admitting or denying the findings, the SEC order said.