Raymond James Financial has agreed to pay over $1.9 million to settle allegations of inadequate record-keeping tied to customer complaints and mutual fund purchases, according to industry regulator FINRA.
The settlement involves Raymond James & Associates, its employee channel, and Raymond James Financial Services, its independent broker-dealer arm, both of which allegedly failed to properly supervise complaint reporting and allowed millions of mutual fund transactions to bypass surveillance systems.
Raymond James will pay more than $1.8 million in fines, as well as over $111,000 in restitution, plus interest. The firm settled without admitting or denying the allegations and did not immediately respond to requests for comment.
FINRA claims that since January 2018, Raymond James lacked adequate procedures to ensure employees were correctly logging customer complaints into the electronic system required for transmission to the regulator, in violation of FINRA Rule 4530. This rule mandates that firms report customer complaints within 30 days to provide transparency on financial professionals through BrokerCheck, a database available to consumers.
BrokerCheck data is critical to FINRA's enforcement efforts. The regulator emphasized that "FINRA uses information obtained under Rule 4530 to identify and initiate investigations into member firms, associated persons, and others who may pose risks to investors," as detailed in the settlement letter with Raymond James.
While Raymond James reported statistical summaries for more than 20 customer complaints, fulfilling part of Rule 4530, FINRA alleged that the firm failed to promptly report individual written complaints involving brokers. These complaints often included serious allegations such as forgery, theft, or misappropriation of funds or securities, but went unreported despite the firms receiving multiple complaints of this nature.
In the cases where complaints were reported, FINRA noted many disclosures were significantly delayed, citing weak supervisory controls. The regulator found that, by the time it informed Raymond James of delays across hundreds of complaints, the firm’s disclosures were, on average, more than three years overdue, with one complaint reported eight years late.
Another issue highlighted in the settlement involved mutual fund transactions made directly with fund companies. FINRA alleges Raymond James used a flawed data filter between January 2012 and May 2016, which contributed to these supervisory lapses. Furthermore, the firm’s oversight systems failed to record over one million transactions due to employees not properly attributing the trades to specific clients—a manual process that FINRA said was not enforced consistently across the firm.
FINRA credited Raymond James for self-reporting the supervisory issues related to direct mutual fund transactions and noted that the firm undertook a thorough retrospective review to address the problem. Nevertheless, FINRA's investigation found that clients were charged over $111,000 in excess sales fees and commissions due to these supervisory failures.
