Raymond James To Pay $1.8M Fine Over Purported Mutual Fund Monitoring Failures
Potentially Unsuitable Mutual Fund Switching May Have Caused Excessive Sales Fees, Commissions
Raymond James Financial Services and Raymond James & Associates, which are both Raymond James Financial Inc. subsidiaries, have agreed to pay over $1.8M to settle Financial Industry Regulatory Authority (FINRA) allegations that they failed to properly supervise the reporting of customer complaints and mutual fund purchases, which resulted in higher fees for customers.
FINRA contends that the two firms did not reasonably supervise at least 4.7 mutual fund purchases from 2012 through at least 2017. The purchases, which were made for customers, weren’t added to Raymond James’ automated surveillance systems. This purportedly caused the failure to review hundreds of A-share, B-share, and C-share mutual fund purchases, including mutual fund switches and swaps that were potentially unsuitable for some investors.
These alleged failures led to mutual fund investors paying more than $111K in excessive sales charges and commissions. FINRA also found that since at least January 2018, the two Raymond James subsidiaries failed to reasonably supervise the reporting of customer complaints in a timely manner.
Without admitting to the charges, Raymond James Financial Services will pay a $1.3M fine and over $85K of restitution. Raymond James & Associates will pay a $525K fine and $26K of restitution with interest.
Failure To Supervise Can Lead To Investor Losses
Broker-dealers are supposed to properly oversee their registered representatives and their activities in customers’ accounts. When a failure to supervise enables unsuitable investment recommendations, excessive mutual fund switching, and more, this can lead to investor losses, including too many commissions and fees being paid.
What Is Mutual Fund Switching and Why Can It Be Problematic?
Switching an investor from one mutual fund to another with similar investment goals can become an issue if doing so has no legitimate investment purpose, and it causes the investor to pay yet another commission and other fees. Excessive mutual fund switching, in which the broker continues to move a customer from one mutual fund to another, can turn into churning, which is a type of broker fraud. Even as the financial advisor earns money from the switch, the investor has to pay for the trade. Also, typically, mutual funds are supposed to be long-term investments.
How Can Our Mutual Fund Switching Lawyers Help?
Shepherd Smith Edwards and Kantas Mutual Fund Switching Lawyers (investorlawyers.com) represent mutual fund investors in recouping the losses they sustained because of mutual fund shifting, excessive trading, failure to supervise, unsuitable investment recommendations and more. We have the experience, skills, knowledge, and resources to take on even the most complex claims.
Call our Mutual Fund Switching Lawyers at (800) 259-9010 or contact us today.