NASD says that it is fining Raymond James Financial Services $2.75 million for not adequately supervising more than 1,000 producing sales managers across the U.S between 2002 to 2004. NASD also permanently barred one of RJFS’s branch managers, Donna Vogt, for making unsuitable recommendations to retirement age and elderly customers regarding variable annuity purchases and mutual funds. Some of these transactions were deemed unsuitable because of their over-concentration in aggressive growth funds. She is also accused of making misleading statements when corresponding with customers, treating them as if they belonged to the same group regardless of financial status, age, objectives, and investment experience.
NASD says the St. Petersburg firm neglected to notice sales practice abuses because of its deficient supervisory system. Producing branch managers had to be their own supervisors-opening and approving new accounts, approving their own sales transactions, and checking their correspondence. Because of this, RJFS’s system for supervision was not in compliance with securities regulations and rules.
NASD also claims that RJFS does not have a proper system set up to properly oversee variable annuity sales. Only three exception reports have been used to screen variable annuity purchases, and transactions were not screened for suitability based on yearly income, net worth of the customer, concentration of variable annuity holdings as part of net worth, or investment experience. As a result, unsuitable recommendations by Vogt went unnoticed.
NASD says the firm did not review annuity sub-account transaction recommendations by its branch managers because there was no system in place. Certain records and books, as well as a system for recording these transactions, were not maintained either, and NASD says that there were deficiencies in the firm’s branch audit program.
Although RJFS and Vogt have consented to NASD’s findings, they have not denied or admitted the charges.
If you are investor and you want to get more information regarding any NASD-registered brokerage or brokerage firm, you can use the NASD’s BrokerChecker, free of charge.
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NASD Fines Raymond James Financial Services, Inc. $2.75 Million for Lax Supervision of Producing Branch Managers, NASD, February 21, 2007
Raymond James Fined in Lack of Oversight, New York Times, February 22, 2007
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