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February 21, 2007 at 12:32 PM
The National Association of Securities Dealers Inc. says a financial services distribution company gave producing branch managers too much ability to supervise their own activities.
The NASD, Washington, has imposed a $2.75 million fine on Raymond James Financial Services Inc., St. Petersburg, Fla., a unit of Raymond James Financial Inc., in connection with allegations that the company failed to maintain an adequate supervisory system for a national network of about 1,100 producing branch managers.
The NASD also permanently barred one of the branch managers, Donna Vogt.
Vogt was able to classify more than 90% of her 700 accounts as having a primary investment objective of “growth” and a risk tolerance of “medium” because Raymond James gave her too much ability to supervise her own business activities, NASD officials allege.
From early 2000 to September 2004, Raymond James let branch managers in its many small offices approve their own transactions, open and accept new accounts, and review their own correspondence, NASD officials report in a discussion of the self-regulatory organization’s findings.
“The firm relied on an electronic transaction surveillance system maintained by [Raymond James'] compliance department, and a series of exception reports, to flag transactions that required further review,” NASD officials allege. “It also assigned supervisory responsibility for these 1,100 branch managers to 3 sales managers. The activities commonly associated with daily supervision, however, were conducted by the branch managers, who in many cases, in effect, supervised themselves.”
