The U.S. Financial Industry Regulatory Authority Thursday ordered brokerage firm Raymond James to payback US$1.7 million to investors that were overcharged on brokerage commissions.

FINRA said that it has ordered Fort Lauderdale-based Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. to pay restitution of US$1.69 million to more than 15,500 investors who were charged unfair and unreasonable commissions on securities transactions. It also fined the firms, US$225,000 and US$200,000, respectively.

The regulator said that it found that from Jan. 1, 2006 to Oct. 31, 2010, the firms used automated commission schedules for equity transactions that charged more than 15,500 customers nearly US$1.69 million in excessive commissions on over 27,000 transactions involving, in most instances, low-priced securities. Additionally, it said that the firms’ supervisory systems were inadequate because they established inflated schedules and rates without proper consideration of the factors necessary to determine the fairness of the commissions, including the type of security and the size of the transaction.

“Raymond James failed to adequately monitor its supervisory systems and as a result, both Raymond James & Associates and Raymond James Financial Services overcharged thousands of customers on their securities transactions. Broker-dealers must ensure that their automated systems set commission charges that are fair to investors,” said Brad Bennett, FINRA executive vice president and chief of enforcement.

In addition to paying restitution to investors, and the fines, FINRA required the firms to revise their automated commission schedules. The firms settled the case, neither admitting nor denying the charges, and consenting to the order.

IE