Two broker-dealer subsidiaries of
Raymond James Financial Inc. today were ordered to pay $2.1 million in fines and restitution to clients for allegedly “unfair and unreasonable commissions on securities transactions,” according to a statement issued this morning by Finra.
The 27,000 transactions involved mostly low-priced securities and occurred from January 1, 2006, till last October, according to the
Financial Industry Regulatory Authority Inc. More than 15,500 clients paid nearly $1.7 million in excessive commissions, the regulator said.
The two main broker-dealer subsidiaries of
Raymond James Financial were ordered to pay fines:
Raymond James & Associates Inc., a broker-dealer with employees, was fined $225,000, while an independent-contractor broker-dealer,
Raymond James Financial Services Inc., was fined $200,000.
The two broker-dealers' supervisory systems were inadequate, Finra said in its statement.
“The firms established inflated schedules and rates without proper consideration of the factors necessary to determine the fairness of the commissions, including the type of security and the size of the transaction,” Finra said.
“Broker-dealers must ensure that their automated systems set commission charges that are fair to investors,” Brad Bennett, Finra's executive vice president and chief of enforcement, said in a statement.
Both
Raymond James & Associates, which has 1,645 brokers, and
Raymond James Financial Services, which has 4,753 affiliated brokers, neither admitted nor denied the charges, according to the separate letters of acceptance, waiver and consent the firms signed this month.
“We are pleased to have resolved this matter with Finra,”
Raymond James' spokesman Steve Hollister wrote in an e-mail. “The commissions that will be refunded under our agreement with Finra involved primarily low-priced securities that were determined by an automated commission schedule, which we revised on July 1, 2011, upon notification of Finra's findings.”
He added that the affected trades represent less than 0.1% of the total equity trades executed by
Raymond James during the period reviewed by Finra. And the average impact per affected account over the five-year period was approximately $110, Mr. Hollister noted.
[More: Sanctuary fired CEO Dickson over alleged conduct issue]
