Raymond James can pay over $1.9 million to settle FINRA allegations that it didn’t correctly report written buyer complaints to regulators for years.
Laws require corporations like Raymond James to repeatedly replace reps’ Kinds U4 and U5, which catalog sure written and oral buyer complaints. Notably, one FINRA rule mandates corporations promptly report when any rep “is the topic of any written buyer grievance involving allegations of theft or misappropriation of funds or securities or of forgery.”
In response to the FINRA settlement letter filed this week, this info helps populate the public-facing BrokerCheck system, the place buyers can search for specific reps to test their disciplinary historical past. Raymond James & Associates can pay $525,000 in fines and $26,169.94 in restitution, whereas Raymond James Monetary Companies can pay $1.3 million in fines and restitution, totaling $85,554.94. Mixed, each corporations can pay roughly $1,936,720.
Raymond James “has didn’t report any written buyer complaints” required below the rule regarding written buyer complaints since at the least Jan. 2018, “though the corporations have acquired quite a few complaints alleging forgery, theft, or misappropriation of funds or securities.”
Moreover, FINRA argued Raymond James didn’t make “well timed reporting” of buyer complaints to reps’ Kinds U4 and U5. From Jan. 2018 by way of Sept. 2021, they didn’t disclose about 450 complaints. Of these, 360 complaints went unreported till 2023, when FINRA found the lapse by way of an examination. In response to the settlement, one in every of these complaints was submitted eight years later.
The hangup reportedly stemmed from guide knowledge entry that generated the quarterly stories to FINRA informing them of written buyer complaints. Sadly, the system meant that the grievance may very well be excluded from the quarterly stories if personnel didn’t enter any specific knowledge (together with grievance date, kind, drawback code or product code).
Raymond James didn’t appropriately spotlight this truth for personnel (although, in accordance with the settlement, it instituted a brand new system in Jan. 2023 that fastened the difficulty), in accordance with FINRA. Raymond James didn’t reply to a request for remark as of press time.
The settlement letter launched Thursday night additionally alleged that Raymond James didn’t supervise at the least 4.7 million mutual fund purchases reps made immediately with mutual fund corporations on behalf of purchasers. This resulted in probably unsuitable trades that left purchasers holding the bag on about $111,724 in “extreme” gross sales expenses and commissions.
