WASHINGTON, D.C.—Investors angry about mounting evidence of mutual fund trading irregularities have nothing on Raymond James chairman and CEO Tom James. “It’s fraud, plain and simple,” James says of the after-hours and market-timing trading practices exposed in investigations by New York attorney general Eliot Spitzer. “Everyone in my company has known for years that they’ll be terminated for doing that, immediately.”
The statements, which were accompanied by some table pounding, came at Raymond James’ annual advisor conference in Washington, D.C. Though he speaks infrequently with the media, James on the topic of traders who decline to play by established rules is outspoken and clear: “These people should be thrown in jail, immediately, for a long time.”
Other Raymond James executives addressed the practical implications of the mutual fund scandals. The firm’s president and COO, Chet Helck, says many of the practices coming under scrutiny are hard to avoid. “At a certain level, you find out about these things after they happen,” Helck said. “We tell our reps to avoid certain funds, but we can’t always control everything that happens in those funds.”
James seconded Helck’s statement, particularly as it applies to market timers. “When the orders come in, it’s almost impossible to identify them,” he says. “These guys are fast on their feet.”
Still, James says, he isn’t worried about market-timing becoming too prevalent. “It’s not a panacea for good results,” he says. “It’s not really a practical thing anyway.”
