Six states impose $4.2M fine on Raymond James for excessive fees
Six states ordered Raymond James to pay $4.2 million in fines and penalties and return $8.25 million to retail customers who were charged excessive commissions for small-dollar trades.
An investigation by the states — Alabama, California, Illinois, Massachusetts, Montana and Washington — found that Raymond James & Associates Inc. and Raymond James Financial Services Inc. charged unreasonable commissions on more than 270,000 low-principal equity transactions since July 1, 2018, according to an order filed by Massachusetts Secretary of the Commonwealth William Galvin. The firm received $8.25 million in excess commissions from those transactions.
Raymond James collected a minimum $75 commission on trades, contradicting a commission schedule that allowed its registered representatives to charge commissions of between $0 and $35 per transaction, depending on the size of the transaction.
“Despite the small stock transaction schedule, even for positions valued at $300 or less, [Raymond James’] order entry systems defaulted to the minimum equity commission, where applicable,” the order states.
As part of the settlement, Raymond James agreed to return the $8.25 million in excessive commissions plus 6% interest to customers who were overcharged.
Galvin said Raymond James failed to implement controls to prevent unreasonable commission. Many customers paid 90% of the principal amount.
“This isn’t the first time Raymond James has overcharged customers,” Galvin said in a statement. “In 2011, they paid more than $2 million in restitution and fines for conduct that was identical to this. It is clear from these actions that there is a continuing need for state regulators to work together to protect the best interests of investors.”
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