Finra said the duo over the six-year period overcharged the institutional customers “by calling the trading desk after placing the orders and instructing the trading desk to increase the commission being charged prior to execution and/or while the orders were being worked by the desk.”
They covered up their misconduct by creating their own trade confirmations, which contained misleading information, including understating commissions, and emailing them to customers, Finra said.
The scheme was exposed in or about April 2018 when RJFS flagged and reviewed an unusually large order for one of the customers, Finra said. By that time, the customers were overcharged about $2.4 million.
Finra said under RJFS’ policy, representatives were not allowed to use trade confirmations they created or mislead the public in communication materials. The firm also surveilled email communication to detect any such prohibited confirmations and potentially misleading statements, Finra said.
In fact, Finra noted that the email surveillance system electronically flagged hundreds of emails sent to customers by the Chongs that contained the misleading trade confirmations as attachments. And though the flagged emails were reviewed by the communications surveillance team, they failed to examine the attached confirmations, Finra said. “Had the team done so, it would have discovered that the representatives were misrepresenting commissions charged on trades, as well as misstating the share price,” Finra said.
Further, the regulator said RJFS neglected to follow up and check the confirmations created by the representatives for accuracy after its compliance staff conducted a branch inspection in April 2017 and escalated the matter.
Taek Man Chong had been in the industry since 1986 and worked at several firms before joining Raymond James in 2000, where he spent 17 years. Jason Taek Chong started in the industry in 2012 with Raymond James.