Raymond James is nearing a settlement with the Securities and Exchange Commission to close its investigation into the use of off-channel business communications at the firm, including a potential $50 million civil penalty.
The Florida-headquartered brokerage firm included language in its two most recent quarterly SEC filings indicating an eventual settlement with the commission.
“We have reached a settlement in principle with the SEC’s Division of Enforcement to resolve this investigation, which will include the payment of a $50 million civil monetary penalty,” the two reports for periods ending on Mar. 31 and June 30, respectively, stated.
According to the Raymond James filing, the settlement was subject to review and “final approval” by the SEC.
Raymond James declined to comment, and the SEC did not return a request for comment on the potential settlement. The commission has not yet released a settlement agreement with the firm on its website.
In the firm’s Q3 2023 earnings call, Raymond James CEO Paul Reilly noted that Raymond James’ quarterly results were negatively impacted by a $55 million provision “related to the previously disclosed SEC industry sweep on off-platform communications.”
Earlier this year, LPL Financial’s quarterly filings revealed it had settled “in principle” to close off-channel communications, including a civil monetary penalty of $50 million “during the second half of 2024.” According to Compliance Week, Ameriprise is also expecting a $50 million fine related to off-channel communications.
In September 2022, the SEC fined 15 broker/dealers and one investment advisor $1.1 billion to settle charges of “widespread and long-standing failures” with firms’ compliance practices meeting recordkeeping requirements through texting and platforms like WhatsApp. The firms included Bank of America Securities, Citigroup Global Markets, Credit Suisse Securities, Deutsche Bank Securities, Goldman Sachs, Morgan Stanley and UBS.
More settlements followed from, among others, Wells Fargo, Interactive Brokers, Nuveen Securities, HSBC and Senvest. In February, the commission fined 16 firms more than $81 million to settle charges they didn’t preserve off-channel communications, including Northwestern Mutual, Guggenheim Securities, Oppenheimer & Co. and Cambridge Investment Research.
