Raymond James Ordered To Pay FINRA Claim Over Auction-Rate Securities
Raymond James has once again been ordered to make good on clients’ investments in illiquid auction-rate securities. It is the third time this summer that arbitrators with the Financial Industry Regulatory Authority (FINRA) have ruled against the broker/dealer over claims involving auction-rate securities.
As reported Aug. 27 by Investment News, the most recent arbitration claim, dated Aug. 16, awards claimants $925,000. Since July 1, arbitrators have ordered Raymond James & Associates, the company’s employee brokerage firm, and Raymond James Financial Services Inc., its independent broker/dealer, to buy back $3.5 million in auction-rate securities from clients.
When the market for auction-rate securities crashed in February 2008, Raymond James Financial’s clients held $1.9 billion in auction-rate debt. Since then, the amount has been reduced to $600 million.
The latest case against Raymond James concerns investors Rex and Sherese Glendenning, both of whom alleged that Raymond James recommended, and then invested their money in, auction-rate securities that consisted of sewer revenue bonds. The investors also claimed that the actions of their Raymond James broker created the “false impression that there were deep pools of liquidity in the auction market.”
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