OLYMPIA – The Washington State Department of Financial Institutions (DFI) announced today that it has joined a multi-state settlement with Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. (collectively, Raymond James), which 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.
This settlement stems from a multistate task force of six state securities regulators including Alabama, California, Illinois, Massachusetts, Montana, and Washington. The states conducted a coordinated investigation into Raymond James’s compensation practices, and concluded that Raymond James charged excessive commissions on more than 270,000 low-principal amount equity transactions nationwide. Raymond James took a commission on these transactions in excess of 5% of the principal value, sometimes taking 100% of the proceeds from a customer’s sale. Over the past five years, Raymond James took more than $8,250,000 in excess commissions from investors.
“Regardless of how large or small an investor’s transactions may be, the people and companies making these transactions on behalf of investors have a duty to ensure adherence to the law,” DFI Division of Securities Director William Beatty said. “DFI is committed to ensuring Washington investors are treated fairly and are protected by our state’s securities laws.”
Raymond James agrees to attest that its policies and procedures have been enhanced to ensure that all commissions are fair and reasonable within 60 days after the effective date of DFI’s order. This attestation will include Raymond James’s certifying that it has established:
- Compliance systems to prevent the imposition of unreasonable or unfair commissions;
- Operational changes designed to ensure that, regardless of the principal amount of a transaction, commissions will not exceed 5%, in the absence of a documented exception; and
- Systems that incorporate all equity transactions, regardless of the principal amount of the transaction, when identifying and reviewing potentially excessive commissions.
“This settlement is a clear example of the importance of multi-state jurisdiction collaboration,” DFI Director Charlie Clark said. “In working together we are better able to identify instances such as this where investors have been harmed, determine the best form of repayment and penalty, and ensure course correction to protect Washington investors in the future.”
The DFI found no evidence of fraudulent conduct by Raymond James, and Raymond James fully cooperated with the investigation. Raymond James neither admits nor denies the findings or conclusions of law as set out in DFI’s order.