Attorney General Alan Wilson announces SC joins settlement with Raymond James ensuring investors get repaid for commission overcharges

(COLUMBIA, S.C.) – Attorney General Alan Wilson announces that South Carolina has joined a multi-state settlement with Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. (“Raymond James”). The settlement was reached with the assistance of certain lead states as well as the North American Securities Administrators Association (NASAA).  Nationwide, Raymond James will pay at least $8.2 million in refunds to clients and $4.2 million in penalties and costs to the states for failing to ensure reasonable commission charges on equity transactions, harming Main Street investors, that occurred over the approximate five-year period from July 1, 2018, to July 17, 2023. 

“Broker-dealers must ensure that investors are charged fair and reasonable commissions and fees for the services provided, regardless of how big or small the investors’ transactions are,” said Attorney General Wilson. “This settlement reflects the continued efforts by state regulators to protect all investors and make sure they are treated fairly by financial service firms.”

Although Raymond James used commission schedules for equity “buy and sell” transactions, they also charged a $75 minimum commission for certain transactions, which resulted in customers being charged commissions of 5% to 90% of the principal value of the transaction. Over the five-year period, Raymond James executed over 270,000 transactions nationwide that resulted in unreasonable commissions charged for the services performed.

Over the same five-year period, Raymond James executed at least 5,093 transactions in South Carolina that resulted in its citizens being charged unreasonable commissions.  Raymond James was ordered to and agreed to provide restitution, including interest, to the affected South Carolina customers in a total amount of not less than $178,212.19.  South Carolina customers eligible for the restitution will be contacted directly by Raymond James by letter mailed to the customer’s last known address. 

As a part of the settlement, Raymond James also agreed that within 60 days of the effective date of the Consent Order, they will enhance their supervisory policies and procedures to ensure that all commissions are fair and reasonable. Furthermore, Raymond James will certify that they have established:

• Compliance systems to prevent the imposition of unreasonable or unfair commissions;
• Operational changes designed to ensure that, regardless of the principal amount of a transaction, 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.

After one year, Raymond James will undergo a review to confirm the implementation of the changes in its supervisory policies and procedures set forth in the Consent Order.  The review will also assess the efficacy of the changes to the practices, policies, and procedures. The results of this review will be reported to the states.

The Consent Order can be found on the South Carolina Attorney General’s website (https://www.scag.gov/inside-the-office/legal-services-division/securities/enforcement/notices-and-orders/).

The Securities Division can be reached by calling 803-734-9916 or by emailing [email protected]. Investors can submit a complaint or learn more about the Securities Division by visiting the Attorney General’s Office website at https://www.scag.gov/inside-the-office/legal-services-division/securities/.