The Securities and Exchange Commission on Thursday ordered Raymond James & Associates to pay a penalty of $500,000 for allegedly failing to supervise a former registered representative and broker who was sentenced to five years in prison last year for misappropriating more than $900,000 from two older clients from October 2015 through April 2019.
Without admitting or denying the SEC's findings, Raymond James consented to the penalty and a censure to settle the dispute.
Raymond James did not immediately respond to a request for comment on Friday.
According to the SEC's order, filed Thursday, Frederick M. Stow of Franklin, Tennessee, misappropriated $901,500 from one of the clients between October 2015 and April 2019. After that client — a World War II veteran — died at the age of 98, Stow went on to misappropriate an additional $22,400 from another older client.
In June 2018, supervisors referred concerns about Stow's management of the first client's accounts to Raymond James' Senior-and-at-Risk-Clients (SARC) group, which had been formed in late 2017 to respond mainly to potential external threats of financial exploitation, according to the SEC order.
The order alleged that after SARC declined to take action, the Raymond James supervisors didn't investigate the concerns further because of a lack of clear communication from the firm about the scope of SARC's investigation and the process for next steps after SARC's work.
Of the $901,500 misappropriated from the first client, $148,000 was drawn between the end of the investigation and when the broker confessed his fraud in May 2019, according to the SEC.
The SEC order found that Raymond James failed to develop policies and procedures reasonably designed to communicate clearly to supervisory and compliance staff SARC's process or the scope of SARC's work in supporting supervisors.
