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Regulation and Compliance > State Regulation

Raymond James Settles ARS Issues

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Raymond James reached an agreement with state securities regulators and the SEC in late June over sales of auction rate securities. As part of the deal, which affects ARS sales made before mid-February 2008, Raymond James will buy back the ARS at par value, which is now about $280 million, and pay a fine of $1.75 million to state regulators. At the time of purchase, the ARS were valued at $2.1 billion.

“I am pleased we are able to resolve this issue and provide liquidity to clients who continue to hold ARS in their portfolios,” said CEO Paul Reilly in a press release. As a result of the agreement, Raymond James says it will take a pre-tax charge of about $50 million in the quarter ending June 30, 2011.

The settlement requires Raymond James to extend offers to repurchase ARS for the next 30 days. The purchase offer is to remain open for 75 days after the distribution of the initial notice to individual investors. Florida and Texas were in charge of the settlement, with Indiana, Missouri, New York, North Carolina, Pennsylvania and South Carolina also involved.

“The Florida Office of Financial Regulation is pleased to have spearheaded this effort that will result in offers to reimburse nearly $300 million to investors nationwide, a quarter of whom are Floridians,” said OFR Commissioner Tom Cardwell, in a press release. The OFR concluded that Raymond James had violated the Florida Securities and Investor Protection Act, Chapter 517, Florida Statutes, and related rules, by having engaged in dishonest or unethical conduct and failing to reasonably supervise its agents.


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