The St. Petersburg financial company tallies the cost of reimbursing overcharged mutual fund customers and paying SEC penalties.
By HELEN HUNTLEY
Published December 24, 2003
ST. PETERSBURG - Raymond James Financial Inc. said Tuesday it could cost more than $13-million to settle complaints that it overcharged customers who made large purchases of mutual funds.
Raymond James expects to pay a penalty of up to $6.5-million as part of an enforcement action by the Securities and Exchange Commission and the National Association of Securities Dealers. Reimbursing customers is expected to cost $6.9-million, although Raymond James said it expects to recover up to half of that from financial advisers who benefited from the excess commissions. That would produce a total pretax impact on Raymond James' earnings of up to $9.8-million.
The statement put a price tag on a previous announcement that Raymond James won't escape unscathed from the problems plaguing the mutual fund industry.
At issue for the St. Petersburg company is the failure of its brokerage subsidiaries to give commission discounts to some customers who were entitled to them. The discounts are based on the size of the purchase. Frequently brokers failed to count purchases on different days or in related accounts that could have been added together to qualify for a discount.
Numerous brokerage firms are facing similar charges. Wachovia Corp., American Express and Legg Mason Inc. have announced that they face possible enforcement action over the issue.
Raymond James stock gained 5 cents per share Tuesday to close at $36.87.