FINRA Charges Raymond James Compliance Officer with Falsifying Reports to Prevent OBA Audit Follow-Up

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FINRA filed a complaint alleging that a former Raymond James and Ameriprise Financial Services broker and compliance officer falsified data submitted to Raymond James related to branch audits, causing the firm to maintain false books and records and preventing supervisory or compliance personnel from following up with audit-related issues, such as investigations of outside business activities.

OHO Complaint #2017053982801

The findings state that the compliance officer's data doctoring pertained to a Raymond James compliance questionnaire that asked brokers whether they had any undisclosed outside business activities, accounts at other firms, or LinkedIn social media profiles.

Based on a broker's answers, the firm determined whether a follow-up visit or other work would be required. For instance, if a broker indicated (s)he had an outside business activity, then a compliance representative would follow-up by performing an inquiry into the nature of the outside business activity to make sure it was compliant with firm and industry policies and standards.

FINRA charges that the compliance officer altered questionnaire data in order to avoid follow-up work by changing "follow-up required" responses to values that did not require follow-up work, effectively hindering the firm's notification system so that required investigations and follow-ups were not performed when they should have been.

The findings did not state whether this records falsification caused the firm to not investigate undisclosed outside business activities, which would have violated Raymond James policies and/or FINRA regulations.

Regulators have long identified problems with undisclosed outside business activities, from compliance failures to outright fraud and massive customer losses. FINRA included outside business activities and private securities transactions in its 2019 exam priorities letter.

For instance, FINRA in June 2018 suspended Newport Beach broker Stephen Johnathan Hoshimi for failing to disclose an outside business activity called "The Hoshimi Group"; according to Hoshimi's file, this damaging undisclosed business led to over $13.8 million in settlements to harmed customers.

If you have invested with a broker or financial adviser in an undisclosed outside business activity or private securities transaction sold away from the firm, and this has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.

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