Raymond James has agreed to pay $1.15 million to settle charges of supervisory failures of its two brokerage units that in one case led to a commission scheme by father-son team that overcharged customers, according to the Financial Industry Regulatory Authority.
Raymond James Financial Services (RJFS), the firm’s independent channel and Raymond James & Associates (RJA), the employee advisor channel, also were censured by the regulator.
According to the Finra letter of acceptance, waiver and consent (AWC), from at least January 2012 through April 2018, RJFS failed to heed multiple red flags that the two registered representatives were excessively charging commission to seven of their institutional customers.
The AWC did not identify the representatives by name, but it revealed the Central Registration Depository (CRD) numbers that belonged to former brokers Taek Man Chong and Jason Taek Chong.
Both representatives were barred by Finra in June 2018 for failing to cooperate with the investigation.
Separately, Finra said from January 2012 to February 2020, RJA and RJFS “failed to have a qualified and registered principal authorize changes to the account name or designation on more than 7,500 equity orders.” And as a result, one customer lost about $100,000. A former RJFS registered representative, Finra noted, “changed the account designation on certain orders from ( or to) the customer to (or from) his own account without principal review.”
RJFS consented to an $800,000 fine plus restitution of $48,574.79, plus interest, and RJA consented to a $300,000 fine, according to the AWC, which also noted that the firm reimbursed most of the customers for their loss.
Asked to respond, Raymond James spokeswoman Jana Fuller said, "We're not commenting."
Finra said the alleged wrongdoing of the representatives came to light after RJFS filed Uniform Termination Notices for Securities Industry Registration (Forms U5) in May 2018, which noted that the two representatives had voluntarily resigned while under investigation by the firm. Also, in February 2019, both RJA and RJFS reported on to Finra that they “failed to undertake the principal review required by Finra Rule 4515.”
The Chongs, who worked in an RJFS branch office in Mercer Island, Wash., targeted foreign institutions whose buy and sell orders involved large blocks of equities, Finra said, noting that the duo agreed to a per share commission rate with their customers.