Raymond James pays over $1.9 million to settle FINRA allegations that it did not correctly report written buyer complaints to regulators for years.
Rules require corporations like Raymond James to frequently 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.”
Based on the FINRA settlement letter filed this week, this data helps populate the public-facing BrokerCheck system, the place traders can search for specific reps to test their disciplinary historical past. Raymond James & Associates pays $525,000 in fines and $26,169.94 in restitution, whereas Raymond James Monetary Companies pays $1.3 million in fines and restitution, totaling $85,554.94. Mixed, each corporations pays roughly $1,936,720.
Raymond James “has did not report any written buyer complaints” required below the rule regarding written buyer complaints since not less than Jan. 2018, “despite the fact that the corporations have obtained 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 means of Sept. 2021, they did not disclose about 450 complaints. Of these, 360 complaints went unreported till 2023, when FINRA found the lapse by means of an examination. Based on the settlement, one among these complaints was submitted eight years later.
The hangup reportedly stemmed from guide knowledge entry that generated the quarterly experiences to FINRA informing them of written buyer complaints. Sadly, the system meant that the grievance may very well be excluded from the quarterly experiences if personnel didn’t enter any specific knowledge (together with grievance date, sort, drawback code or product code).
Raymond James didn’t appropriately spotlight this reality for personnel (although, based on the settlement, it instituted a brand new system in Jan. 2023 that mounted the problem), based on 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 did not supervise not less than 4.7 million mutual fund purchases reps made straight with mutual fund firms on behalf of purchasers. This resulted in probably unsuitable trades that left purchasers holding the bag on about $111,724 in “extreme” gross sales costs and commissions.