Raymond James & Associates along with a Milwaukee-based investment firm, Robert W. Baird & Co. reached a settlement over penalties regarding wrap fee compliance with the Securities and Exchange Commission (SEC) last week.
The SEC had charged the long established St. Petersburg, FL-based investment firm with violating Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 by failing to comply with stated regulations concerning wrap fees. Raymond James agreed to pay $600,000 in penalties following the settlement, in accordance with SEC orders.
The SEC’s investigation found that Raymond James had failed to establish policies and procedures regarding what commissions are charged to clients when sub-adviser trade their investments with broker-dealers outside wrap fee programs. Wrap fees are comprehensive, straight-forward charges levied by an adviser to a client in exchange for bundled investment services.
Investment firms are required to provide information to clients outlining commissions on trades outside their wrap fee programs. This allows clients to understand the magnitude of costs incurred by trading outside a wrap fee program or using a sub adviser. When financial advisors do not convey this information, clients are unable to determine the viability of investment services outside wrap fee programs. They may be unaware they are paying commissions that differ from the preset wrap fee.
In lacking these procedures, Raymond James failed to provide clients with a clear understanding of investment services and programs outside established wrap fees.
Raymond James has a large client-base in the Tampa/St. Petersburg area. Compliance failures may mean that investors have improperly diversified portfolios or other issues in their accounts that may result in significant losses to their investments. Savage Villoch Law, PLLC can determine if your investment portfolios were subjected to commissions and costs outside of standard wrap fee programs. Don’t be intimidated by your investments, take charge of them. Savage Villoch, PLLC is here to help.
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