• September 11, 2024
• Raymond James & Associates Inc

Raymond James & Associates, Inc. (CRD#: 705) and Raymond James Financial Services, Inc. (CRD#: 6694) are a registered brokerage firm and investment advisor firm in St. Petersburg, FL.

Allegations of Misconduct

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), Since at least January 2018, RJA (Raymond James and Associates) and RJFS (Raymond James Financial Services) have failed to reasonably supervise the firms’ reporting, and timely reporting, of customer complaints via FINRA Rule 4530 filings and amendments to registered representatives’ Forms U4 and U5. The firms have not taken reasonable steps to ensure that firm personnel manually enter into the firms’ electronic system certain data required to make quarterly FINRA Rule 4530 filings. The firms also have not established reasonable controls to ensure that associated persons timely notify appropriate firm personnel of customer complaints.

Raymond James therefore has violated Article V, Sections 2 and 3 of FINRA’s By-Laws, and FINRA Rules 3110, 1122, 4530, and 2010. From January 2012 to at least December 2017, RJA and RJFS also failed to reasonably supervise at least 4.7 million mutual fund purchases that the firms’ representatives made directly with mutual fund companies on behalf of firm customers (direct business transactions). The firms failed to ingest many transactions into their automated surveillance systems and had not configured their systems to review many other transactions. As a result, the firms violated FINRA Rule 3110 and its predecessor, NASD Rule 3010, and FINRA Rule 2010.

For example, from January 2018 through September 2021, Raymond James failed to timely disclose approximately 450 customer complaints. The firms did not timely disclose approximately 360 of those complaints through FINRA Rule 4530(d) filings until the spring of 2023, after FINRA notified the firms of their failures to disclose; by that time, the disclosures were, on average, over three years late, and one was eight years late.

As another example, from May 2022 to May 2023, RJFS failed to timely report in quarterly FINRA Rule 4530(d) filings at least ten customer complaints; the firm reported those complaints an average of 270 days late, and it reported at least two of the complaints over a year late. Moreover, between January 2018 and September 2021, Raymond James failed to timely disclose approximately 90 customer complaints via amendments to Forms U4 or U5. On average, the firms disclosed those complaints 175 days late—and in some cases, nearly two years late.

Moreover, Raymond James failed to take reasonable steps to supervise registered representatives’ prompt transmission of certain customer complaints to supervisors, and supervisors’ prompt transmission of certain customer complaints to personnel responsible for determining the reportability of customer complaints. For example, from January 2019 to September 2021, Raymond James disciplined only 14 representatives for failing to timely notify the firms of complaints.

Respondents also consent to the imposition of the following sanctions:

For RJA:

• a censure.
• a $525,000 fine.
• restitution of $26,169.04 plus interest as described below.
• An undertaking that, within 180 days of the date of the notice of acceptance of this AWC, a member of Respondent’s senior management who is a registered principal of the firm shall certify in writing that, as of the date of the certification, the firm has remediated the customer complaint and direct business system configuration issues identified in this AWC and implemented a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with Article V, Sections 2 and 3 of FINRA’s By-Laws, and FINRA Rules 3110, 1122, and 4530 regarding the issues identified in this AWC.

For RJFS:

• a censure.
• a $1,300,000 fine.
• restitution of $85,554.94 plus interest as described below; and
• An undertaking that, within 180 days of the date of the notice of acceptance of this AWC, a member of Respondent’s senior management who is a registered principal of the firm shall certify in writing that, as of the date of the certification, the firm has remediated the customer complaint and direct business system configuration issues identified in this AWC and implemented a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with Article V, Sections 2 and 3 of FINRA’s By-Laws, and FINRA Rules 3110, 1122, and 4530 regarding the issues identified in this AWC

 

For a copy of the FINRA Disciplinary Action Details, click here.

 

We Help Investors Recover Investment Losses

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

 

Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.

 

Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.

 

Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.

 

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.