Raymond James Financial has agreed to pay approximately $13 million to resolve allegations that it overcharged retail investors on small dollar transactions, according to a group of state securities regulators.
Overcharging on Equity Transactions
The North American Securities Administrators Association claims that over the past five years, Raymond James has applied unreasonable commissions on more than 270,000 equity transactions and trades. As a result, customers paid $8.25 million more than they should have.
Faulty Order Entry Systems
The securities regulator in Massachusetts reveals that Raymond James typically charged a minimum commission of $75 for specific equity buy and sell transactions. However, for equity sell transactions with a principal amount under $300, lower fees were supposed to apply. Unfortunately, the company’s order entry systems occasionally defaulted to the $75 minimum commission, and these mistakes went unnoticed.
Past Overcharging Incidents
Massachusetts Secretary of the Commonwealth William F. Galvin comments on Raymond James’s history of overcharging: “This isn’t the first time Raymond James has overcharged customers. In 2011, they paid more than $2 million in restitution and fines for conduct that was identical to this. It is clear from these actions that there is a continuing need for state regulators to work together to protect the best interests of investors.”
Reimbursement and Policy Changes
As part of the settlement, Raymond James will reimburse affected customers $8.25 million and revise its policies and procedures to ensure fair and reasonable commissions for all transactions. Furthermore, the St. Petersburg, Florida-based company will pay fines and penalties totaling $4.2 million to the states involved.
A Commitment to Clients: Raymond James Resolves Commission Charges
Raymond James, a renowned company in the financial industry, has reaffirmed its commitment to prioritizing clients’ interests above all else. In a recent statement, a company spokesperson expressed their satisfaction in resolving a matter related to commissions charged for small principal amount equity trades through their automated commission process.
The spokesperson stated, “We are pleased to resolve this matter regarding commissions charged in a specific population of small principal amount equity trades generated by our automated commission process. All impacted clients will be reimbursed the excess commission amounts plus interest, and we are implementing the necessary adjustments to our equity commission schedule.”
This resolution was reached through the joint efforts of state securities regulators from Alabama, California, Illinois, Montana, and Washington, who actively participated in the investigation. Their commitment and dedication were acknowledged by Andrew Hartnett, the President of the North American Securities Administrators Association (NASAA) and Deputy Commissioner of the Iowa Insurance Division.
Hartnett thanked his fellow state securities regulators for their diligence and hard work, emphasizing the importance of protecting investors. He stated, “This settlement shows once again that state securities regulators will take swift and decisive action to protect investors. NASAA has spent a lot of energy and resources on the pocketbook issues that are so important to Main Street investors.”
NASAA, established in 1918, serves as an advocate for state and provincial securities regulators across the United States, Canada, and Mexico. Its primary focus lies in investor protection and education, as well as fostering coordination among securities regulators.
In conclusion, Raymond James’ commitment to its clients shines through as it resolves the commission charges issue. The collaboration between state securities regulators highlights the dedication to safeguarding investors’ interests. NASAA’s ongoing efforts in addressing vital concerns for Main Street investors underscore their commitment to ensuring a fair and transparent financial market.
