In a press release issued on September 29, 2011, the Financial Industry Regulation Authority (FINRA) announced its securities arbitration ruling against Raymond James Financial Services Inc. (RJFS) and Raymond James & Associates Inc. (RJA). The firms were charged with “unfair and unreasonable commissions on securities transactions.” RJFS and RJA were ordered to pay $1.69 million in restitution as well as a total of $425,000 in total fines. Of those fines, RJFS will pay $200,000 and RJA will pay $225,000.
FINRA’s findings showed that RJFS and RJA used automated commission schedules from January 1, 2006 until October 31, 2010 for equity transactions. These automated commission schedules affected more than 15,500 customers and 27,000 transactions. In total, nearly $1.69 million was charged in excessive commissions. In most cases, the excessive commissions were charged on low-priced securities. According to FINRA’s press release, “The firms’ supervisory systems were inadequate because the firms established inflated schedules and rates without proper consideration of the factors necessary to determine the fairness of the commissions, including the type of security and the size of the transaction.”
In addition to the restitution and fees, the firms must conform to the requirements of the Fair Prices and Commissions Rule by revising their automated commission schedules. Once the automated commission schedules have been revised, the firms must calculate and repay any additional overcharges that occurred from November 1, 2010, until the date the schedules were corrected.
Without confirming or denying the charges against them, RJFS and RJA consented to FINRA’s findings. FINRA Executive Vice President and Chief of Enforcement, Brad Bennett, said of the arbitration proceedings, “Broker-dealers must ensure that their automated systems set commission charges that are fair to investors.”
If you believe you have been charged unreasonable or unfair commissions, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.