Indiana Secretary of State Diego Morales announced the Securities Division of the Indiana Secretary of State’s Office has joined a multistate settlement with Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. (collectively, Raymond James). The firms will pay at least $8.2 million in refunds to clients and $4.2 million in penalties and costs to the states for charging unreasonable commissions on trades that harmed Main Street investors. Indiana will receive $75,000 as its share of the settlement which will be deposited equally between the Securities Enforcement Fund and the Indiana General Fund.
“We are committed to ensuring large brokerage firms protect all investors regardless of how big or small the transaction. I am thankful for our team and how hard they work each day to protect the hard-earned money of all Hoosiers,” said Indiana Secretary of State Diego Morales.
The multistate investigation found that Raymond James charged unreasonable commissions on over 270,000 equity transactions and trades nationwide over the past five years. Raymond James took a commission on these transactions more than 5% of the principal value, with commissions in some cases exceeding 90% of the principal value of the customer’s transaction. Based on the investigative findings, the states concluded that Raymond James failed to have sufficient policies and procedures in place to ensure that its customers were being charged reasonable commissions and fees. Impacted customers in states participating in the settlement will receive restitution of the excessive commissions plus interest. There were over 6,600 transactions in Indiana with markups more than 5% which amounted to $203,471.97.
Raymond James must also certify within 60 days that all supervisory policies and procedures have been enhanced so all commissions are fair and reasonable. Raymond James will certify it has established:
o Compliance systems to prevent the imposition of unreasonable or unfair commissions.
o Operational changes designed to ensure, regardless of the principal amount of a transactions, commissions will not exceed 5%, in the absence of a documented exception; and
o Systems that incorporate all equity transactions, regardless of the principal amount of the transaction, when identifying and reviewing potentially excessive commissions.
One year after certifications, Raymond James will undergo a review to confirm the implementation of the changes set forth. The review will also assess the efficacy of the changes to Raymond James’s practices, policies, and procedures. The results of this review will be reported to the states.
Raymond James neither admits or denies the findings and cooperated fully with the investigation.
If you have questions or concerns about your investments or a financial professional, please visitThe Indiana Securities Division website orcall 317-232-6681.