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Raymond James Compliance Officer Barred for Falsifying Data

Tasked with ensuring that Raymond James & Associates acted in accordance with FINRA rules and securities laws, a compliance officer received a permanent bar from the industry for allegedly falsifying data and altering internal audits, changing over 500 answers from 145 Raymond James brokers on compliance questionnaires, purportedly to avoid follow-up work that would have been triggered by some of the original responses to those questions.

In concluding that the compliance officer "lacks the fitness to serve as a securities professional," FINRA OHO's Default Decision #2017053982801 found he falsified firm branch audit data, thus causing the firm to maintain inaccurate books and records, and failed to appear for on-the-record testimony. FINRA first charged the compliance officer with falsifying the Raymond James data in February 2019.

Specifically, he purportedly changed data relative to responses Raymond James brokers gave to the question of whether they had any undisclosed outside business activities or undisclosed securities accounts at other broker-dealers, thus making it appear that certain brokers did not have outside business activities when they, in fact, were engaged in outside business activities.

Outside business activities can be hotbeds of fraudulent activity. Customers are often lured into "investing" or loaning money to a broker's separate business and are often unaware such activity is separate from the brokerage firm itself. Brokerage firms are obligated to either approve or prohibit their brokers from engaging in such activities, and must supervise the employee's outside business activities the firm approves. In addition, the firms must take reasonable steps to inquire if their brokers are engaged in undisclosed outside business activities. In arbitration claims, firms try to claim they had no duty to supervise such problem activities despite a lengthy body of case law and regulatory decisions to the contrary.

The OHO findings indicate that while FINRA regulations and/or firm policy required the compliance officer to follow up if any representative stated that (s)he had an undisclosed outside business activity, RayJay's officer deliberately changed the master spreadsheet of these stockbrokers' responses, purportedly to avoid follow-up work (e.g., changing the original values corresponding to a broker's indication of the existence of an outside business activity to a manipulated value that would indicate the absence of an undisclosed outside business activity).

Raymond James terminated its compliance officer in 2017 for "improperly editing internal branch audit documents," according to the OHO and InvestmentNews. The same compliance officer briefly worked at Ameriprise Financial Services after his 2017 termination from Raymond James and allegedly attempted to cover-up his misconduct by unsuccessfully trying to correct the data that he altered.

If you have invested with Raymond James or with any broker or financial adviser whose undisclosed outside business activities or conflicts of interest created a situation in which the representative recommended an unsuitable product that has proven harmful to your investments or interests due to excessive fees or losses, please call our experienced FINRA arbitration attorneys at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

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