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9 Nov 2019

Raymond James payouts reach $37 million after latest SEC case By Tobias Salinger

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https://www.financial-planning.com/news/raymond-james-settles-sec-case-on-uits-for-15m

Raymond James agreed to pay more than $15 million to settle SEC allegations it collected excess commissions and failed to conduct adequate suitability reviews. It’s the firm’s third major settlement of the year for a combined $37 million.

The SEC alleged in a Sept. 17 administrative order that Raymond James’ employee broker-dealer and RIA, its independent BD and the IBD’s corporate RIA improperly charged inactive advisory accounts and took in extra commissions for sales of unit investment trusts.

The latest case came after Raymond James settled two client overcharging lawsuits in June for $15 million and agreed to pay disgorgement of $6.9 million in March under the SEC share-class disclosure program. The 7,900-advisor firm also agreed to pay $150 million to investors in an alleged fraudulent EB-5 investment program in April 2017.

The firm received $4.9 million in advisory fees over 4 ½ years from 7,708 accounts it failed to properly review after they were inactive for at least a year, the new SEC order states. It also amassed $5.5 million in excess sales charges from 2,044 brokerage accounts that sold UIT positions before maturity and repurchased often-similar products, the SEC says.

“Investment advisors and broker-dealers have ongoing obligations to their clients and customers,” C. Dabney O’Riordan, co-chief of the SEC Enforcement Division’s asset management unit, said in a statement. “Raymond James’ failures cost their advisory clients and brokerage customers millions that will be repaid as part of this settlement.”

Raymond James Vice President for Corporate Communications Steve Hollister issued an emailed statement about the case.

“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,” Hollister said. “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.”

The corporate RIA of the Raymond James IBD found that 1,703 inactive advisory accounts were unsuitable and converted them to brokerage accounts at the beginning of the SEC investigation, according to the order. It also closed another 2,112 inactive accounts.

Registered representatives in Raymond James’ employee and independent contractor channels obtained a portion of the sales expenses collected by selling UIT positions before their maturity and purchasing newly issued products over a five-year span, the order states.

The two brokerages also failed to disclose conflicts of interest in recommending UITs without applying $660,000 in sales-load discounts, according to the SEC. Furthermore, their corporate RIAs collected $51,000 in excess advisory fees because they used incorrect UIT valuations to calculate the management fees, the regulator states.

Raymond James’ brokerages violated provisions of the Securities Act, while its RIAs breached two Advisers Act guidelines, according to the three-count SEC order. The firm agreed to pay $15.2 million in disgorgement, restitution and a civil penalty.

This article is suggested reading by Secured Financial Services, LLC and President and Chief Executive Officer of Secured Financial Solutions, LLC, Anil Vazirani. Please visit https://secured-financial-solutions.com/

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Based in Scottsdale, Arizona, Secured Financial Solutions is one of the leading financial service firms in Arizona, catering to the financial planning needs of retirees and pre-retirees.

One of the benefits you can count on when working with one of our financial advisors is an outstanding personal relationship with an advisor. As a client, you will deal directly with a financial advisor who will take the time to understand your situation, objectives, estate planning, and retirement planning needs as well as your risk tolerance. We work directly with other advisors as well as CPAs, attorneys and trustees, to ensure that the investments we make will align with your estate plans, and that you are not faced with heavy tax burdens.

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This article is suggested reading by Secured Financial Services, LLC and President and Chief Executive Officer of Secured Financial Solutions, LLC, Anil Vazirani. Please visit https://secured-financial-solutions.com/

Retire and Stay Retired Safe! Smart! Secure!

Based in Scottsdale, Arizona, Secured Financial Solutions is one of the leading financial service firms in Arizona, catering to the financial planning needs of retirees and pre-retirees.

One of the benefits you can count on when working with one of our financial advisors is an outstanding personal relationship with an advisor. As a client, you will deal directly with a financial advisor who will take the time to understand your situation, objectives, estate planning, and retirement planning needs as well as your risk tolerance. We work directly with other advisors as well as CPAs, attorneys and trustees, to ensure that the investments we make will align with your estate plans and that you are not faced with heavy tax burdens.

You can expect Secured Financial Solutions to develop comprehensive solutions to your complex wealth management and estate planning needs. Our one-on-one approach helps you achieve your financial planning goals, including maximizing your estate, retirement planning, minimizing your tax obligation, and continuing your family legacy. Our investment advisors will work with your CPA, attorneys, and other trusted professionals to help you make intelligent choices that align with your financial and personal goals.