The dealers’s approach to supervisory reviews effectively excluded fee-based accounts with large, uninvested cash holdings
A hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) has approved a settlement with Toronto-based Raymond James Ltd. in which the dealer admitted it failed to maintain an adequate supervisory system of fee-based accounts, IIROC announced Monday.
Raymond James agreed to pay a $75,000 fine and costs of $2,500.
The settlement relates to the dealer’s process for selecting fee-based accounts for supervisory review. According to the settlement agreement, the firm’s approach effectively excluded fee-based accounts with large, uninvested cash holdings from its review process.
“For example, the respondent did not have procedures to flag cash holdings that exceeded a fixed dollar amount, and/or cash holdings that reflected a fixed percentage of material account asset value,” the settlement agreement states.
The supervisory issue came to light after four client complaints emerged involving a former registered rep, Scott Douglas Ford, who settled with IIROC in 2016.
Ford admitted to suitability violations due to clients holding cash for extended periods and paying account fees that were far above what they would have paid in commissions due to the lack of activity in their accounts.
Raymond James settled these complaints by reimbursing the clients for the fees associated with their cash holdings.
The firm has since enhanced its supervisory systems, the settlement says.