The Financial Industry Regulatory Authority (Finra) today ordered Raymond James & Associates Inc. (RJA) and Raymond James Financial Services Inc. (RJFS) to pay $1.7 million in restitution to more than 15,500 investors who it says were charged unfair and unreasonable commissions on securities transactions.
FINRA also fined RJA $225,000 and RJFS $200,000.
Finra, the non-governmental regulator of securities firms doing business in the U.S., found that from Jan. 1, 2006, to Oct. 31, 2010, RJA and RJFS used automated commission schedules for equity transactions that charged more than 15,500 customers nearly $1.7 million in excessive commissions on over 27,000 transactions involving, in most instances, low-priced securities.
The two firm's supervisory systems were inadequate because 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, according to Finra.
RJA and RJFS neither admitted nor denied the charges, but consented to the entry of Finra's findings, according to Finra.
"Raymond James failed to adequately monitor its supervisory systems and as a result, both Raymond James & Associates and Raymond James Financial Services overcharged thousands of customers on their securities transactions," said Brad Bennett, Finra executive vice president and chief of enforcement. "Broker-dealers must ensure that their automated systems set commission charges that are fair to investors."
Finra required the firms to revise their automated commission schedules to conform to the requirements of the Fair Prices and Commissions Rule. In addition to paying the restitution, each firm is required to calculate and repay additional overcharges from Nov. 1, 2010, through the date that each firm revised its schedule.