Raymond James is nearing a settlement with the Securities and Exchange Commission to end its investigation into the firm's use of off-channel business communications, including a possible $50 million civil penalty.
The Florida-based brokerage firm included the language in its two most recent quarterly SEC filings, indicating an eventual settlement with the commission.
“We have reached an agreement in principle with the SEC's Division of Enforcement to resolve this investigation, which will include the payment of a civil monetary penalty of $50 million,” the two reports for periods ending on March 31 AND June 30respectively, it is said.
According to the Raymond James filing, the deal was subject to review and “final approval” by the SEC.
Raymond James declined to comment and the SEC did not return a request for comment on the potential settlement. The commission has not yet published a settlement agreement with the firm on its website.
In the firm's third-quarter 2023 earnings call, Raymond James CEO Paul Reilly noted that Raymond James' quarterly results were negatively impacted by a $55 million provision “related to the SEC industry cleanup disclosed previously in off-platform communications”.
At the beginning of this year, LPL Financial's quarterly filings are revealed it had decided “in principle” to shut down communications outside the channel, including a civil monetary penalty of $50 million “during the second half of 2024”. According to Compliance WeekAmeriprise also faces a $50 million fine related to out-of-channel communications.
In September 2022, The SEC fined 15 broker/dealers and an investment adviser $1.1 billion to settle allegations of “widespread and long-standing failures” with the compliance practices of firms that meet data retention requirements over messaging and platforms such as WhatsApp. The firms included Bank of America Securities, Citigroup Global Markets, Credit Suisse Securities, Deutsche Bank Securities, Goldman Sachs, Morgan Stanley and UBS.
More settlements followed from, among others, Wells Fargo, Interactive Brokers, Nuveen Securities, HSBC AND Senvest. In February the commission fined 16 firms over $81 million to settle the charges they did not store communications outside the channelincluding Northwestern Mutual, Guggenheim Securities, Oppenheimer & Co. and Cambridge Investment Research.