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Raymond James to Reaches $15 Million Settlement Over UIT Sales Excessive Fees and Commissions

Posted on Monday, September 23rd, 2019 at 8:41 pm    

Raymond James & Associates, Inc. logo

Erez Law is currently investigating Raymond James brokers across the country who recommended unsuitable unit investment trusts (UITs).

A UIT is an investment company that offers a fixed portfolio as redeemable units to investors for a specific period of time. UITs are designed to provide capital appreciation and/or dividend income. UITs consist of collective investments in which many investors combine their funds to be managed by a portfolio manager. UITs are also bought and sold directly from the company that issues them, in this case Raymond James, although sometimes they can be bought on the secondary market. UITs are issued via an initial public offering (IPO).

In September 2019, the Securities and Exchange Commission (SEC) instituted a settled order against three Raymond James entities for improperly charging advisory fees on inactive retail client accounts and charging excess commissions for brokerage customer investments in certain UITs. The three Raymond James entities agreed to pay $15 million as part of the settlement.

Raymond James & Associates, Inc. and Raymond James Financial Services Advisors agreed to be censured and to disgorge approximately $12 million, which represented inappropriate client advisory fees and UIT commissions, as well as prejudgment interest, and to pay a $3 million civil penalty. Also, the three Raymond James entities have agreed to make distributions to harmed investors.

The SEC found that Raymond James & Associates, Inc. and Raymond James Financial Services Advisors, Inc. failed to consistently perform promised ongoing reviews of advisory accounts that had no trading activity for at least one year. “According to the order, because they did not conduct the reviews properly, they failed to determine whether the client’s fee-based advisory account was suitable. The order further finds that the entities also misapplied the wrong pricing data to certain UIT positions held by advisory clients, causing them to overpay fees,” according to the SEC.

The SEC also found that Raymond James’ brokers recommended that their brokerage customers sell the UITs before their maturity and buy new UITs without determining whether the recommendations were suitable for their customers.

According to the SEC order, “the recommendations for early sales and purchases resulted in customers incurring (and the Raymond James entities receiving) greater sales commissions than would have been charged had the customers held the UITs to maturity and then purchased new UITs. The order further finds that Raymond James also failed to apply available sales discounts for brokerage customers that rolled over their proceeds after selling a maturing UIT to purchase another one.”

Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Raymond James may be liable for investment or other losses suffered by its customers.

Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.