Raymond James will pay more than $1.9 million to settle FINRA allegations that it failed to properly report written customer complaints to regulators for years.
The regulations require firms like Raymond James to regularly update representative Forms U4 and U5, which catalog certain written and verbal customer complaints. Specifically, a FINRA rule requires firms to report immediately when any representative “is the subject of any written customer complaint involving allegations of theft or misappropriation of funds or securities or forgery.”
According to the FINRA settlement letter filed this weekthis information helps populate the BrokerCheck system with the public, where investors can request specific representatives to check their disciplinary history. Raymond James & Associates will pay $525,000 in fines and $26,169.94 in restitution, while Raymond James Financial Services will pay $1.3 million in fines and restitution, totaling $85,554.94. Combined, the two firms will pay approximately $1,936,720.
Raymond James has “failed to report any written customer complaints” required under the written customer complaint rule since at least January 2018, “even though the firm has received numerous complaints alleging forgery, theft or misappropriation of funds or securities”.
Additionally, FINRA argued that Raymond James did not make “timely reporting” of customer complaints on representative Forms U4 and U5. From January 2018 to September 2021, they failed to detect about 450 complaints. Of those, 360 complaints went unreported until 2023, when FINRA discovered the error through an examination. According to the agreement, one of these complaints was filed eight years later.
The shutdown reportedly stemmed from manual data entry that generated quarterly reports for FINRA informing them of written customer complaints. Unfortunately, the system meant that a complaint could be excluded from quarterly reports if staff did not provide any specific data (including complaint date, type, problem code or product code).
Raymond James did not correctly highlight this fact to staff (although, according to the settlement, it implemented a new system in January 2023 that fixed the problem), according to FINRA. Raymond James did not respond to a request for comment as of press time.
The settlement letter issued Thursday evening also alleged that Raymond James failed to oversee at least 4.7 million representative mutual fund purchases made directly with mutual fund companies on behalf of clients. This resulted in potentially inappropriate trades that left customers holding the bag with approximately $111,724 in “excessive” sales fees and commissions.