SEC Fines Raymond James $500,000 Over Supervisory Failures

Posted on October 11th, 2022 at 2:04 PM
SEC Fines Raymond James $500,000 Over Supervisory Failures

From the Desk of Jim Eccleston at Eccleston Law.

The Securities and Exchange Commission (SEC) has imposed a $500,000 fine on Raymond James over its alleged supervisory failures related to a former Tennessee-based advisor.

According to the SEC, Raymond James’s compliance department failed to adequately respond to a branch manager’s concerns about withdrawals in an elderly client’s account. The department’s failure to act enabled an advisor in Cool Springs, Tennessee, to misappropriate $901,500 from a 98-year old’s retirement account between 2015 and 2019, according to a settlement. The branch manager was not named by the SEC, and the manager attempted to escalate concerns about the withdrawals in June 2018 after taking over the Cool Springs office by referring the case to Raymond James’ Senior and At-Risk Clients group.

While Raymond James created the case team in 2017, the group was not typically tasked with flagging internal threats and subsequently failed to contact the clients directly or initiate an investigation. According to the SEC, the compliance department deemed the investigation to be complete and merely put financial advisor Frederick Stow on a performance improvement plan. In 2019, Stow was able to steal an additional $22,400 from a second elderly client, according to the SEC. Raymond James terminated Stow in May 2019 for “misappropriating funds from a client’s account”, according to BrokerCheck. Stow subsequently pled guilty to aggravated identity theft and securities fraud in federal court in 2020, which resulted in a 60-month prison sentence.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

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