The SEC charged Raymond James & Associates and Raymond James Financial Services for having made inaccurate statements when selling auction rate securities (ARS) to customers.  Without admitting or denying the SEC’s allegations, the firms agreed to the following settlement terms:  

• Pay a $1.75mn fine to state regulators in Florida and Texas.
• Offer to purchase eligible ARS from its eligible current and former customers.
• Use its best efforts to provide liquidity solutions to customers who acted as institutional money managers who are not otherwise eligible customers.
• Reimburse eligible customers for interest and/or losses, who either took out loans from Raymond James after 2/13/08 or sold their ARS below par.
• Participate in a special arbitration process with those eligible customers who claim additional damages.
• Establish a toll-free telephone assistance line and a public Internet page to respond to questions concerning the terms of the settlement.

SEC Allegations.   According to the SEC’s administrative order, some RR's and FA's at Raymond James told customers that ARS's were safe, liquid alternatives to money market funds and other cash-like investments.  In fact, they were very different types of investments. 

Among other things, Raymond James RR's and FA's didn't provide customers with adequate and complete disclosures regarding the complexity and risks of ARS, including their dependence on successful auctions for liquidity.

The SEC’s order against Raymond James finds that the firm willfully violated Section 17(a)(2) of the Securities Act of 1933. The Commission censured Raymond James, ordered it to cease and desist from future violations, and reserved the right to seek a financial penalty against the firm.

SEC Miami Office Staff Credits.   Investigation by Edward McCutcheon, Andre Zamorano, Jon Jordan, Chedly Dumornay;  examination by Michael Nakis, Carlos Gutierrez, Nicholas Monaco.

For further details, go to:   [SEC PR 11-136, 6/29/11]