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IN THE MATTER OF: RAYMOND JAMES FINANCIAL * * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER No. CO-2009-7757-S |
PRELIMINARY STATEMENT
WHEREAS, the Banking Commissioner (the “Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (the “Act”), and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies promulgated under the Act (the “Regulations”);
WHEREAS, Raymond James Financial Services, Inc. (“Raymond James”) is a broker-dealer registered in Connecticut under the Act since July 7, 1978, and has its principal office located at 880 Carillon Parkway, St. Petersburg, Florida;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking, conducted an examination of Raymond James’ records pursuant to Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations, and a related investigation under Section 36b-26 of the Act to determine whether Raymond James had violated, was violating or was about to violate any provision of the Act or any regulation or order under the Act (the “Investigation and Examination”);
WHEREAS, as a result of the Investigation and Examination, the Division obtained evidence that Raymond James, in certain instances, failed to follow its mutual fund exchange procedures relating to the completion and submission of mutual fund switch letters. The mutual fund switch letters which documented the exchanges to and/or from one or more mutual funds were not fully completed and were not submitted in the time frame required by and outlined in the firm’s supervisory procedures;
WHEREAS, as a result of the Investigation and Examination, the Division obtained evidence that Raymond James failed to supervise one of its compliance employees who, in response to the Division’s request for information, provided an inaccurate written statement on two occasions relating to mutual fund trades in a Connecticut client’s accounts, which trades were outside their contingent deferred sales charge (“CDSC”) period;
WHEREAS, Raymond James, in a subsequent written response to the Division, corrected its inaccurate statement relating to the CDSCs associated with the mutual fund trades;
WHEREAS, Raymond James acknowledged that the misstatements resulted from one of their compliance employees not properly verifying the information contained on the related transactions’ mutual fund switch forms;
WHEREAS, Raymond James represented that, subsequent to the Division’s investigation, the area within its compliance department that handles regulatory matters had undergone structural changes to avoid similar oversights in the future. Raymond James represented to the Division that, as of April 2009, there are now two compliance examiners dedicated solely to researching and responding to regulatory matters;
WHEREAS, the foregoing conduct would support the initiation of administrative proceedings under Section 36b-15 of the Act to suspend or revoke Raymond James’ broker-dealer registration under the Act or to restrict or impose conditions on the securities activities that the firm may perform in this state; and/or proceedings under Section 36b-27 of the Act seeking the entry of an order to cease and desist and/or an order imposing an administrative fine against Raymond James;
WHEREAS, an administrative proceeding under Sections 36b-15 and 36b-27 of the Act would constitute a "contested case" within the meaning of Section 4-166(2) of the Connecticut General Statutes;
WHEREAS, Section 4-177(c) of Chapter 54 of the Connecticut General Statutes provides that "[u]nless precluded by law, a contested case may be resolved by stipulation, agreed settlement, or consent order or by the default of a party";
WHEREAS, Section 36b-31(a) of the Act provides, in part, that: "The commissioner may from time to time make, amend and rescind such . . . orders as are necessary to carry out the provisions of Sections 36b-2 to 36b-33, inclusive [of the Connecticut Uniform Securities Act]";
WHEREAS, without holding a hearing and without trial or adjudication of any issue of fact or law, and prior to the initiation of any formal proceeding, the Commissioner and Raymond James reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
WHEREAS, Raymond James, without admitting or denying any of the Commissioner’s allegations or findings, expressly consents to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order; and
WHEREAS, Raymond James, through its execution of this Consent Order, represents and agrees that it has reasonably designed a system for supervising the activities of its agents, investment adviser agents, and Connecticut office operations in order to prevent the violations alleged in this Consent Order from occurring in the future;
CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, Raymond James, through its execution of this Consent Order, voluntarily waives the following rights:
| 1. |
To receive prior written notice within the meaning of Sections 36b-15(f), 36b-27(a), 36b-27(d) and 4-177(b) of the Connecticut General Statutes; |
| 2. |
To present evidence and argument and to otherwise avail itself of Section 4-177c(a) of the Connecticut General Statutes; |
| 3. | To present its position in a hearing in which it is represented by counsel; |
| 4. | To have a written record of the hearing made and a written decision issued by a hearing officer; and |
| 5. | To seek judicial review of, or otherwise challenge or contest, the matters described herein, including the validity of this Consent Order; |
CONSENT TO ENTRY OF FINDINGS
WHEREAS, Raymond James, through its execution of this Consent Order, accepts and consents to the entry of the following Findings by the Commissioner:
| 1. | The entry of this Consent Order is appropriate, in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act; |
| 2. | In contravention of Section 36b-31-6f(b) of the Regulations, Raymond James failed to follow its mutual fund exchange procedures relating to the completion and submission of mutual fund switch letters; and |
| 3. | In contravention of Section 36b-31-6f(b) of the Regulations, Raymond James failed to reasonably supervise the activities of one of its employees who, in response to the Division’s request for information, provided an inaccurate written statement on two occasions relating to mutual fund trades in a Connecticut client’s accounts, which trades were outside their contingent deferred sales charge period; |
CONSENT TO ENTRY OF SANCTIONS
WHEREAS, Raymond James, through its execution of this Consent Order, consents to the Commissioner issuing an order imposing on it the following sanctions:
| 1. | Raymond James, its representatives, agents, employees, affiliates, assigns, and successors in interest shall cease and desist from engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act, either directly or through any person, organization or other device; and |
| 2. | No later than the date this Consent Order is entered by the Commissioner, Raymond James shall remit to the Department of Banking, via certified bank check, payable to "Treasurer, State of Connecticut", the sum of fifteen thousand dollars ($15,000), ten thousand dollars ($10,000) of which shall constitute an administrative fine, and five thousand dollars ($5,000) of which shall be applied to defray the costs associated with the Division’s investigation of this matter; |
CONSENT ORDER
NOW THEREFORE,
the Commissioner enters the following:
| 1. |
The Sanctions set forth above be and are hereby entered; |
| 2. |
Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Raymond James based upon a violation of this Consent Order or the matters underlying its entry if the Commissioner determines that compliance with the terms herein is not being observed or if any representations made by Raymond James and reflected herein are subsequently discovered to be untrue; and |
| 3. | This Consent Order shall become final when entered. |
| Dated at Hartford, Connecticut | ______/s/__________ | |
| this 16th day of March 2010. | Howard F. Pitkin | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Donald K. Runkle, state on behalf of Raymond James Financial Services, Inc. that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of Raymond James Financial Services, Inc., that Raymond James Financial Services, Inc. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Raymond James Financial Services, Inc. voluntarily consents to the entry of this Consent Order, expressly waiving any right to a hearing on the matters described herein.
| Raymond James Financial Services, Inc. | |
| By | _____/s/___________________________ |
| Donald K. Runkle | |
| Chief Compliance Officer |
State of: Florida
County of: Pinellas
On this 9th day of March 2010, personally appeared Donald K. Runkle, signer of the foregoing Consent Order, who, being duly sworn, did acknowledge to me that he was authorized to execute the same on behalf of Raymond James Financial Services, Inc., a corporation, and acknowledged the same to be his free act and deed, before me.
_______/s/________________________________
Notary Public
Date Commission Expires: January 20, 2014