FINRA Fines Raymond James & Associates, Inc. $180,000 for Compliance issues
According to FINRA, Raymond James & Associates, Inc. (CRD #705, St. Petersburg, Florida) submitted an AWC in which the firm was censured, fined $180,000 and required to revise its WSPs and address training of associated persons.
Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it lacked a reasonable supervisory system, including WSPs, by not, among other things, including ongoing reviews of daily trade blotters of its convertible bonds desk for a specific trading pattern, as well as compliance with applicable securities laws and regulations, including Section 206(3) of the Investments Advisers Act of 1940.
The findings stated that the firm’s convertible bonds desk allegedly sold bonds to another broker-dealer in a principal capacity and concurrently (within a few minutes or less) either purchased the same amount of bonds from the broker-dealer in an agency capacity for a firm advisory client or clients, or purchased the same amount of bonds from the broker-dealer in a principal capacity for an advisory client or advisory clients of the firm’s affiliate.
Since the firm’s convertible bonds were offered on a conditional basis, its convertible bonds desk needed to manually accept any attempt by a third party to lift its offer off the alternative trading system used. Accordingly, the convertible bonds desk allegedly knew that there was an attempt to lift the firm’s inventory for the exact same quantity of the same convertible bond that the firm was concurrently looking to buy such bonds for an advisory client.
While the firm’s WSPs pertaining to managed accounts generally prohibited principal trades with advisory clients (absent an exception) and established trading system functionality limitations to preclude principal fills directly for advisory clients, the firm’s supervisory oversight over its convertible bonds trading did not include, among other things, ongoing reviews of daily trade blotters that might detect potentially violative conduct such as the specific trading pattern at issue.
For FINRA’s full finding see FINRA Case #2011030345701
Raymond James & Associates, Inc. is a registered investment advisory firm located in St. Petersburg, FL.
This information which is publicly available on FINRA’s website has been provided by The White Law Group.
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