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Michigan Joins $12.4 Million Multistate Settlement with Raymond James
October 18, 2023
Marlon I. Brown, Acting Director of the State of Michigan Department of Licensing and Regulatory Affairs, announced that the Bureau of Corporations, Securities & Commercial Licensing (CSCL) has joined a multistate settlement with Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. (collectively, Raymond James or the firms).
The firms will pay at least $8.2 million in refunds to clients and $4.2 million in penalties and costs to the states for charging unreasonable commissions on trades that harmed Main Street investors. Michigan will receive $75,000 as its share of the settlement which will be deposited in the CSCL Securities Investor Education and Training Fund. Raymond James will also pay restitution to affected Michigan investors.
“State securities regulators are committed to ensuring that brokerage firms charge reasonable fees for all investors regardless of how big or small the transaction,” Brown said.
The multistate investigation found that Raymond James charged unreasonable commissions on over 270,000 equity transactions and trades nationwide over the past five years. Raymond James took a commission on these transactions more than 5% of the principal value, with commissions in some cases exceeding 90% of the principal value of the customer’s transaction. Based on the investigative findings, the states concluded that Raymond James failed to have sufficient policies and procedures in place to ensure that its customers were being charged reasonable commissions and fees. Impacted customers in states participating in the settlement will receive restitution of the excessive commissions plus interest. The Consent Order found that, in Michigan, Raymond James executed 15,273 transactions with unreasonable commissions totaling $469,538.05.
Raymond James must also certify to CSCL within 60 days that all supervisory policies and procedures have been enhanced so all commissions are fair and reasonable. Raymond James will certify it has established:
- Compliance systems to prevent the imposition of unreasonable or unfair commissions.
- Operational changes designed to ensure, regardless of the principal amount of a transactions, commissions will not exceed 5%, in the absence of a documented exception; and
- Systems that incorporate all equity transactions, regardless of the principal amount of the transaction, when identifying and reviewing potentially excessive commissions.
One year after the required certifications, Raymond James will undergo a review to confirm the implementation of the changes set forth. The review will also assess the efficacy of the changes to Raymond James’s practices, policies, and procedures. The results of this review will be reported to the states.
Raymond James neither admits or denies the findings and cooperated fully with the investigation.
If you have questions or concerns about your investments or a financial professional, please visit www.michigan.gov/securities or call 517-335-5237.