Raymond James to Pay $15M to SEC for Improper Charges

RJA and RJFS failed to have a reasonable basis for recommending certain unit investment trust transactions to brokerage customers, the complaint states, "and failed to disclose the conflict of interest associated with earning greater compensation when recommending certain securities without providing applicable sales-load discounts to brokerage customers."

According to the order, the recommendations for early sales and purchases resulted in customers incurring (and the Raymond James entities receiving) greater sales commissions than would have been charged had the customers held the UITs to maturity and then purchased new UITs.

The order further finds that Raymond James also failed to apply available sales discounts for brokerage customers that rolled over their proceeds after selling a maturing UIT to purchase another one.

"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, in announcing the action. "Raymond James' failures cost their advisory clients and brokerage customers millions that will be repaid as part of this settlement."

To settle the charges, the three Raymond James entities agreed to 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.

The three entities agreed to make distributions to harmed investors.

"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," the firm 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."