Raymond James & Associates Inc. has settled Finra charges that it sent clients at least 1.85 million inaccurate trade confirmations over an eight-year period, the regulator announced today.
Without admitting or denying the charges, the St. Petersburg, Fla.-based broker-dealer has agreed to a censure and a $300,000 fine for sending clients the inaccurate execution confirmations between January 2014 and May 2022.
The firm allegedly generated at least 750,000 inaccurate confirmations that disclosed that the firm acted in one capacity during execution, when in fact it acted in more than one capacity, Finra said in the settlement.
A system failure prevented Raymond James from populating its confirmations with accurate reporting that showed it acted in multiple capacities, the regulator added.
“The firm did not provide each specific capacity in which the firm acted on the customer confirmations. Instead, Raymond James disclosed that it acted in a ‘mixed capacity (i.e., agent, agency cross, principal and/or riskless principal)’ and that the ‘breakdown of execution capacity is available upon request,’” Finra noted.
Accurate trade confirmations are important because they alert investors “to potential conflicts of interest with their broker dealers and provide them the means to verify the terms of their transactions and evaluate transaction costs and the quality of their broker-dealers’ executions,” Finra said in the settlement.
"We decline to comment on the Finra matter," Raymond James spokesperson Jana Fuller said in an email.
Due to a programming error, Raymond James also sent customers 1,050,000 trade confirmations between July 2017 and September 2022 that incorrectly disclosed transactions as “average price executions” when in fact the firm filled the order in a single execution.
A review of two of the firm’s six order management systems, revealed that Raymond James incorrectly identified single executions as average price executions on more than 1 million confirmations issued to customers, Finra said.
In addition, from December 2018 through June 2020, Raymond James failed to disclose or inaccurately disclosed that it was a market maker and had additional financial vested interest on trades on approximately 52,350 confirmations sent to customers.
Again, Finra said, the issue stemmed “from a programming error that impacted the input that identified the accurate market maker status on trade confirmations.”
Finra said that in addition to other books and records violations, Raymond James violated Exchange Act Rule 10b-10, which requires broker-dealers that effect securities transactions for customers to provide customers a confirmation, at or before completion of each transaction, disclosing price, who they are acting as an agent for, and if the broker-dealer is a principle or market maker.